CMI — Q2 2026 Earnings Preview
Setup in one line
Q1 confirmed Power Systems as the structural engine: segment +18.6% YoY with record 29.5% EBITDA margin, lead times into 2H'28, and a company-wide guide raise (rev +8–11%, EBITDA margin 17.75–18.50%). Adj EPS $6.15 beat Street by ~9% — 8th straight Adj beat, though magnitude is moderating as Street catches up. Q2 tests whether PS stays sold-out and Engines/Components deliver the raised mid-teens growth bands.
Cummins is a power-systems compounder with a cyclical engine/components chassis. The franchise prices data-center genset scarcity; the print must show that scarcity is still tightening — not just another modest Adj beat on an already-raised bar.
Growth trajectory — Power Systems carrying the P&L. The last print (Q1 2026, reported 2026-05-05) delivered net sales $8,398M (+2.7% YoY vs $8,174M), a slight top-line beat. Adj EPS $6.15 (company-reported) vs ~$5.63–5.64 Street (~+9%) extended an 8/8 L8Q Adj EPS beat streak. Power Systems sales $1,956M (+18.6% YoY), EBITDA margin 29.5% (+590 bps) — segment hit prior 2030 profitability targets early. NA powergen +23%, China powergen +84%. GAAP diluted EPS $4.71 absorbed a ~$199M low-pressure fuel-cell exit charge (~$1.44/sh) — ignore for run-rate. Company EBITDA ex-SI $1,489M at 17.7% margin.
Key watch items into Q2 2026:
- Power Systems guide hold: FY26 rev +14%–+19% / EBITDA margin 25–26% — any cut is thesis risk; lead times into 2H'28 are the duration asset.
- Lead times / config mix: “larger configs sold out” → customers pull smaller gensets — sustainability of mix and the 29.5% margin peak.
- Engine / Components raise delivery: Engines raised to +7–12%, Components +5–10%, Distribution +9–14% post-Q1 — delivery vs. the raise is the non-PS proof.
- Beat magnitude: Street has caught up; +5–10% Adj beats more likely than the +20% monsters of early 2025. An in-line print with soft PS language would be a worse signal than a small miss with sold-out color.
- Company guide integrity: rev +8–11%, EBITDA margin 17.75–18.50% — reaffirm is base; another raise is upside; any trim is the bear tell.
Classification: AGGRESSIVE raiser, CONSISTENT Adj beater (8/8). Thesis is Power Systems / data-center genset sold-out into 2H'28; Engines/Components raised with the company; bar is high after the raise.
How to read CMI guidance: Cummins issues full-year company and segment revenue/margin ranges (not quarterly EPS). There is no Q2 2026 EPS/revenue guide to parse — the print is measured against (a) the post-Q1 raised FY2026 framework and (b) sell-side consensus for the quarter (~$7.21 EPS / ~$9.33B sales per FMP).
| FY2026 guide | Prior (Feb'26) | Post Q1'26 | FY2025 actual | Read-through |
|---|---|---|---|---|
| Revenue growth | +3% to +8% | +8% to +11% | $33,670M | Broad raise; top end supply-constrained |
| EBITDA margin (ex charges) | 17.0–18.0% | 17.75–18.50% | $5,843M EBITDA ex-SI | +75–100bps raise at midpoint |
| Power Systems rev | +12–17% | +14%–+19% | $7,463M | Core upside / thesis metric |
| Power Systems EBITDA margin | 23–24% | 25–26% | n/a (FY band) | Ahead of prior 2030 plan; Q1 at 29.5% |
| Engines rev | Flat to +5% | +7% to +12% | — | Inflection post-raise |
| Components rev | Flat to +5% | +5% to +10% | — | Raised with company |
| Distribution rev | +5–10% | +9% to +14% | — | Aftermarket + power pull-through |
| Tax rate | ~24% | ~23% | — | Favorable vs prior |
| Capex | $1.35–1.45B | Maintained | — | PS capacity incremental |
Guidance change at Q1: 10 of 11 segment/market metrics revised up. Company rev raised +5pp at the low end; PS rev +2pp and PS EBITDA +200bps. Street had been modeling ~+5% company growth before the raise — the bar for Q2 and the rest of FY26 is now materially higher. Tariff impact framed as “net immaterial” (~20–30 bps).
Q2 2026 Street (FMP): EPS $7.21 · Revenue ~$9.33B.
3a. Current quarter (Q2 2026) — consensus vs. Q2 2025 comp
Cummins does not guide the quarter; columns show consensus, the prior-year comp, and the post-Q1 FY framing.
| Metric | Q2'25 actual (comp) | Q2'26 consensus | YoY | Framing |
|---|---|---|---|---|
| Net sales | $8,643M | ~$9.33B | ~+8% | Implies mid-band of +8–11% FY pace if H2 holds |
| EBITDA ex-SI | $1,587M | n/a (Street EPS-led) | — | Q2'25 margin 18.4% — tough margin comp |
| Power Systems sales | $1,889M | n/a (FY +14–19%) | Q2'25 was +18.9% YoY | Must stay mid-to-high teens to hold FY PS guide |
| Adj. diluted EPS | ~$6.43 (co-reported) | $7.21 | ~+12% | Street embeds raise; beat magnitude likely modest |
Note — reported vs. adjusted: Q1 GAAP diluted EPS of $4.71 was diluted by a ~$199M low-pressure fuel-cell exit charge (~$1.44/sh). Adj EPS $6.15 is the run-rate number. Accelera-related charges have been serial (Q4'24 restructure → Q3'25 electrolyzer impairment → Q4'25 strategic review → Q1'26 sale) — watch for further portfolio noise distorting GAAP vs. Adj in Q2.
3b. Historical quarterly trend (Daloopa) — 8 quarters + YoY
Trajectory over absolutes. Net sales, EBITDA ex-SI, and Power Systems form the core P&L read; margins where Daloopa IDs exist.
| Metric | Q2'24 | Q3'24 | Q4'24 | Q1'25 | Q2'25 | Q3'25 | Q4'25 | Q1'26 |
|---|---|---|---|---|---|---|---|---|
| Net sales ($M) | 8,796 | 8,456 | 8,447 | 8,174 | 8,643 | 8,317 | 8,536 | 8,398 |
| Net sales YoY % | — | — | — | — | −1.7% | −1.6% | +1.1% | +2.7% |
| EBITDA ex-SI ($M) | 1,345 | 1,389 | 1,332 | 1,460 | 1,587 | 1,427 | 1,369 | 1,489 |
| EBITDA ex-SI YoY % | — | — | — | — | +18.0% | +2.7% | +2.8% | +2.0% |
| EBITDA ex-SI margin | — | — | — | 17.9% | 18.4% | 17.2% | 16.0% | 17.7% |
| Power Systems sales ($M) | 1,589 | 1,687 | 1,743 | 1,649 | 1,889 | 1,996 | 1,929 | 1,956 |
| Power Systems YoY % | — | — | — | — | +18.9% | +18.3% | +10.7% | +18.6% |
FY2025 anchors: Net sales $33,670M · EBITDA ex-SI $5,843M · Power Systems $7,463M.
Interpretation: consolidated sales re-accelerated from a Q1'25 trough (+2.7% in Q1'26 after two soft YoY quarters in mid-2025). Power Systems has been the structural offset — six straight quarters of roughly high-teens growth when measured on L4Q comps (Q2'25 +18.9%, Q3'25 +18.3%, Q1'26 +18.6%; Q4'25 +10.7% the softest print). Company EBITDA margin peaked at 18.4% in Q2'25 and compressed to 16.0% in Q4'25 before recovering to 17.7% in Q1'26 — still inside the raised 17.75–18.50% FY band. Q2 is seasonally a strong PS and company-sales quarter; Street ~$9.33B embeds continued re-acceleration.
3c. FQ+1 (Q3 2026) and FY bridge
| Period | Revenue | Adj EPS / margin | Note |
|---|---|---|---|
| Q2 2026 (Street) | ~$9.33B | $7.21 | FMP; first full quarter after broad raise |
| Q3 2026 | n/a (not isolated) | n/a | Tougher PS comps (Q3'25 $1,996M peak); no quarterly guide |
| FY2026 guide | +8% to +11% | EBITDA 17.75–18.50% | Raised at Q1; embeds strong H2; PS +14–19% |
| FY+1 / duration | Powergen backlog | Lead times → 2H'28 | Multi-year sold-out is the duration asset; risk is Street over-extrapolating 29.5% PS margins |
The setup in one paragraph: management enters Q2 having delivered the most decisive raise of the cycle at Q1 — company, Power Systems, Engines, Components, Distribution, NA HD truck, China, and India all revised up. Tone arc: defensive (Q2'25) → cautious bottom-signaling (Q3'25) → cautious reinstatement (Q4'25) → confident raise + Analyst Day tee-up (Q1'26). The core bull points (PS sold-out into 2H'28, data-center genset scarcity, Engines inflection) are intact and quantified. The risk is not demand for large gensets — it is (a) whether Street has already modeled the raise, (b) whether 29.5% PS margins invite peak-fear, and (c) whether capacity (not orders) becomes the bottleneck.
Tone trajectory: Q1 language was decisive on power-gen, transparent on the one-time fuel-cell charge, and willing to raise mid-year. Top end of company guide framed as supply-constrained, not demand-constrained (third shift at Rocky Mount NC; supplier capacity the bottleneck). Tariff “net immaterial.” Accelera still a serial GAAP-optics overhang even as EBITDA-loss guide improved post fuel-cell sale.
Management-quality read: pattern of under-guiding Power Systems is borderline systematic — then raising. That is bullish for multi-year PS but means Q2 is less about another raise and more about holding the raised bands with high-quality PS commentary (lead times, config mix, capacity). Peers: CAT same day for joint power-gen read-through; ALSN for MD/Class 8 color.
| FY2026 metric | Status at Q1'26 | Confidence into Q2 | Why |
|---|---|---|---|
| Company rev +8–11% | Raised from +3–8% | High | Q1 already +2.7%; PS carrying; Street ~$9.33B implies ~+8% Q2 |
| EBITDA margin 17.75–18.50% | Raised from 17.0–18.0% | Medium-high | Q1 at 17.7%; Q2'25 18.4% is a tough margin comp |
| PS rev +14–19% | Raised from +12–17% | High | Q1 +18.6%; lead times into 2H'28; sold-out large configs |
| PS EBITDA 25–26% | Raised from 23–24% | Medium | Q1 at 29.5% — peak-fear risk if mix dilutes; guide still below run-rate |
| Engines +7–12% / Components +5–10% | Raised | Medium | Delivery of the raise is the non-PS proof; NA truck still cyclical |
What to listen for on Aug 4 (tone tells):
(1) Do they hold, raise again, or trim PS +14–19% / 25–26%? Any cut = thesis risk. (2) Lead times — still into 2H'28 or pulling in? (3) Config mix — are large configs still sold out? (4) Engines/Components delivery vs. raised bands. (5) Capacity / supplier bottleneck language (supply-constrained top end). (6) EPA 2027 / prebuy color for 2H'26–1H'27. (7) Accelera / further portfolio charges on GAAP.
| Catalyst | Latest KPI | Expectation into Q2'26 | Direction |
|---|---|---|---|
| Power Systems sold-out duration | PS sales Q1 $1,956M (+18.6%); lead times into 2H'28 | Hold mid/high-teens growth; reaffirm +14–19% / 25–26% | Positive / structural |
| Data-center genset scarcity | NA powergen +23%, China powergen +84% (Q1); large configs sold out | Continued hyperscaler pull; mix may dilute toward smaller units | Positive |
| Engine cycle inflection | FY26 Engines raised to +7–12% | Delivery of raise; NA HD truck 230–250k units guide | Improving |
| Components + Distribution | Components +5–10%; Distribution +9–14% post-raise | Aftermarket + power pull-through support company guide | Positive |
| Further guide raises | Broad raise at Q1 (10/11 metrics up) | Another raise possible but bar high; reaffirm is base case | Watch |
| EPA 2027 / prebuy | Modest 2H'26 prebuy flagged; B-platform delay to Jan 2028 | Optional upside on MD; 1H'27 bumpy risk as platforms launch | Watch / risk |
| Portfolio cleanup (Accelera) | Q1 ~$199M fuel-cell charge; GAAP EPS $4.71 | Further charges possible; Adj is the run-rate lens | Negative (optics) |
Bull case
PS >+20% with lead times still into 2H'28, Engines/Components deliver raised bands, company reaffirms or raises again → Street $7.21 becomes easy and the multi-year powergen duration narrative tightens.
Bear case
PS growth decelerates into the mid-teens or below, mix/margin peak-fear on 29.5%, Engines soft vs. raise, or any trim to company/PS guide → de-rate on a high-bar print even if Adj EPS is near consensus.
Ex-earnings newsflow and industry color since the Q1 report (2026-05-05), most recent first. The material driver remains hyperscaler power scarcity and the post-raise setup into Aug 4.
| Date | Item | Earnings read-through |
|---|---|---|
| Ongoing | Hyperscaler power shortages / data-center genset demand | Primary demand driver for Power Systems. Q1 color (large configs sold out, lead times into 2H'28) remains the thesis spine into the Q2 print. |
| Industry | EPA 2027 engine rules / MD prebuy optionality | Supports Engines raise delivery and modest 2H'26 prebuy. B-platform delay to Jan 2028 (current B-Series sold through 2027) is a known watch for post-2027 competitive positioning. |
| Peer calendar | CAT same day; ALSN prior day | Joint power-gen read-through from CAT; MD/Class 8 color from ALSN. CMI print will be cross-checked against peer power and truck commentary. |
| May 5, 2026 | Q1 beat + broad FY26 guide raise | Thesis confirmation event. Sets the high bar for Aug 4: reaffirm is base; another raise is upside; any PS softness is the bear tell. |
Read-through: newsflow is dominated by structural power-gen demand and the post-Q1 raise, not incremental company-specific shocks. No product recall, litigation, or demand air-pocket has surfaced in the window that would force a pre-print guide change. The debate is bar height and PS commentary quality, not whether the franchise still has the cycle.
Cummins has been a persistent high-magnitude Adj EPS beater: 8/8 L8Q Adj EPS beat streak. Magnitude is compressing as Street correctly models Power Systems — Q1'26 was ~+9% vs earlier monsters (e.g. Q2'25 ~+23%). That is the healthy late-cycle pattern of a catch-up Street, not a broken beat engine.
| Metric | Q2'25 | Q3'25 | Q4'25 | Q1'26 |
|---|---|---|---|---|
| Adj EPS surprise | +23% | Beat | Beat | +9% |
| Adj EPS (co / Street) | $6.43 vs $5.23 | $5.59 vs $4.83 | $5.81 vs $5.10 | $6.15 vs $5.63 |
| Quarter | Adj EPS actual | Street est. | Surprise | Result |
|---|---|---|---|---|
| 2025 Q2 | $6.43 | $5.23 | +23% | Beat |
| 2025 Q3 | $5.59 | $4.83 | Beat | Beat |
| 2025 Q4 | $5.81 | $5.10 | Beat | Beat |
| 2026 Q1 | $6.15 | ~$5.63 | +9% | Beat |
Pattern verdict — consistent Adj beater, magnitude compressing. The beat mechanism is Power Systems outperformance + company under-guide, not luck. Into Aug 4 the higher-probability outcome is still a modest Adj beat — but the signal is PS growth/margin commentary and guide hold, not whether EPS clears $7.21 by a few cents. GAAP will remain noisy if Accelera charges continue.
Cummins into Aug 4 is a high-bar, high-quality industrial print: best pure-play public data-center genset leverage among coverage industrials, with Engines/Components raised and an 8/8 Adj beat streak. The risk is not that Power Systems has stopped working — it is that Street and the post-Q1 raise already embed that success.
| Scenario | Shape | Implication |
|---|---|---|
| Bull | PS >+20% + lead times still 2H'28 + another company/PS raise | Duration narrative tightens; Street forced higher again |
| Base | In-line / slight beat vs $7.21 + guide reaffirm; PS mid/high teens | Holds the raise; focus stays on multi-year powergen, not the quarter |
| Bear | PS decelerates or margin/guide cut; Engines miss raised band | High-bar de-rate even if Adj EPS near consensus |
Bottom line: BUY into the print on structural PS / data-center scarcity into 2H'28 — but trade the quality of PS commentary and guide hold, not the raw beat size. Bar is high after the raise; magnitude of surprises will keep compressing.