Engine manufacturer Cummins (NYSE: CMI) announced better-than-expected revenue in Q2 CY2026, with sales up 9.4% year on year to $9.46 billion. Its GAAP profit of $6.73 per share was 6.1% below analysts’ consensus estimates.

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Company Overview

With more than half of the heavy-duty truck market using its engines at one point, Cummins (NYSE: CMI) offers engines and power systems.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, Cummins’s sales grew at a decent 8.4% compounded annual growth rate over the last five years. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Cummins’s recent performance shows its demand has slowed as its revenue was flat over the last two years.

We can dig further into the company’s revenue dynamics by analyzing its most important segments, Components and Engine , which are 32.6% and 30.6% of revenue. Over the last two years, Cummins’s Components revenue (axles, brakes, drivelines) averaged 6.7% year-on-year declines while its Engine revenue (diesel and gas-powered engines) averaged 5.3% declines.

This quarter, Cummins reported year-on-year revenue growth of 9.4%, and its $9.46 billion of revenue exceeded Wall Street’s estimates by 1.6%.

Looking ahead, sell-side analysts expect revenue to grow 11.4% over the next 12 months, an improvement versus the last two years. This projection is particularly healthy for a company of its scale and indicates its newer products and services will fuel better top-line performance.

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Operating Margin

Cummins’s operating margin has more or less stayed the same over the last 12 months , averaging 9.9% over the last five years. This profitability was solid for an industrials business and shows it’s an efficient company that manages its expenses well. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, Cummins’s operating margin might have fluctuated slightly but has generally stayed the same over the last five years. We like to see margin expansion, but we’re still happy with Cummins’s performance considering most Heavy Transportation Equipment companies saw their margins plummet.

In Q2, Cummins generated an operating margin profit margin of 13.5%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth — for example, a company could inflate its sales through excessive spending on advertising and promotions.

Cummins’s EPS grew at an unimpressive 5.6% compounded annual growth rate over the last five years, lower than its 8.4% annualized revenue growth. We can see the difference stemmed from higher interest expenses or taxes as the company actually improved its operating margin and repurchased its shares during this time.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

Cummins’s two-year annual EPS growth of 18.8% was fantastic and topped its flat revenue.

Diving into Cummins’s quality of earnings can give us a better understanding of its performance. While we mentioned earlier that Cummins’s operating margin was flat this quarter, a two-year view shows its margin has expanded. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q2, Cummins reported EPS of $6.73, up from $6.43 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects Cummins’s full-year EPS to grow 61.2% from $19.57 to $31.54.

Key Takeaways from Cummins’s Q2 Results

It was encouraging to see Cummins beat analysts’ revenue expectations this quarter. On the other hand, its EPS missed and its EBITDA fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 7.6% to $599.50 immediately following the results.

Cummins underperformed this quarter, but does that create an opportunity to invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).