Cummins Inc. (CMI): BCG Matrix [Dec-2025 Updated]

You need a clear map of where Cummins Inc. (CMI) is winning and where it's spending for the future; here is the quick BCG Matrix analysis. Honestly, the late 2025 portfolio view shows a company at a crossroads: the Power Systems Star is exploding with 30-35% projected data center revenue growth, but that success is balanced against the cash-burning Question Mark that is Accelera, which posted a $(96) million EBITDA loss in Q3. Meanwhile, the traditional Engine segment is feeling the pinch, even as the Distribution unit keeps printing cash, hitting $3.2 billion in Q3 revenue. We've sorted the entire portfolio-from the Dogs facing cyclical downturns to the clear Stars-so you can see exactly where management must invest, hold, or divest next. Dive in below to see the full breakdown.

Background of Cummins Inc. (CMI)

You're looking at Cummins Inc. (CMI), a global leader in power solutions, and honestly, understanding its current shape requires a look at the latest numbers, which show a company navigating some choppy waters. Cummins operates through five main business segments: Engine, Components, Distribution, Power Systems, and Accelera by Cummins, all working under the strategic umbrella of the Destination Zero strategy, focusing on decarbonization.

Let's look at the most recent snapshot we have, which is the second quarter of 2025. For that quarter, Cummins reported total revenues of $8.6 billion, which was a 2% decrease compared to the same period last year. Still, the company managed to significantly boost its overall profitability, posting an Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $1.6 billion, representing 18.4% of sales, up from 15.3% in Q2 2024.

The performance across the segments tells a contrasting story, which is key for any portfolio analysis. The Power Systems Segment was a clear standout, delivering record profitability with sales up 19% to $1.9 billion, driven by strong demand for power generation, especially for data centers. The Distribution Segment also saw healthy growth, with sales increasing 7% to $3.0 billion.

On the other hand, the more traditional businesses faced headwinds. The Engine Segment, which is the core of the business, saw sales drop 8% to $2.9 billion due to lower demand in North American on-highway truck markets. Similarly, the Components Segment revenue fell 9% to $2.7 billion. Accelera by Cummins, the zero-emissions focused unit, had sales of $105 million but continued to post an EBITDA loss, hitting $100 million in Q2 2025.

Because of this persistent economic uncertainty, especially in key markets like trucking, Cummins officials have withdrawn their full-year forecast for 2025, though they remain focused on execution and shareholder returns, having just increased the quarterly dividend for the 16th consecutive year. The company's net income for Q2 2025 was $890 million, resulting in diluted Earnings Per Share (EPS) of $6.43.

Cummins Inc. (CMI) - BCG Matrix: Stars

You're looking at the segment of Cummins Inc. (CMI) that is currently dominating a high-growth area, which is exactly what a Star in the Boston Consulting Group (BCG) Matrix represents. The Power Systems segment is the clear leader here, posting a 18% increase in sales for the third quarter of 2025, hitting $2.00 billion in revenue. This growth is outpacing the overall company revenue decline of 2% for the quarter, showing where the future momentum is concentrated.

The engine driving this exceptional performance is the explosive growth in power generation, specifically catering to the massive buildout of data centers. These facilities require reliable, high-capacity backup power, making Cummins' Power Systems a critical supplier in this rapidly expanding market. Management has clearly signaled this focus, as evidenced by their forward-looking statements.

Management projects that data center-related revenues specifically will rise by 30-35% in the full year 2025. That kind of growth rate in a specific end-market solidifies the Star positioning-high market share in a market that's expanding rapidly. To maintain this leadership and meet this demand, you know this business unit requires, and is likely receiving, significant capital investment to scale production capacity for these critical power solutions.

This segment is a leader in a rapidly expanding market, which means it demands continued capital investment to keep pace with demand and fend off competitors. Here's a quick look at the supporting data points that define this Star:

• Power Systems Q3 2025 sales reached $2.00 billion.
• Data center-related revenue is projected to rise 30-35% in 2025.
• EBITDA margin for the segment expanded to 22.9% in Q3 2025.
• This growth offsets declines in the Engine segment, which fell 11%.

Cummins Inc. (CMI) - BCG Matrix: Cash Cows

You're looking at the core generators of capital for Cummins Inc., the businesses that thrive in mature markets and print cash flow, even when the broader economy is choppy. For Cummins Inc., the Distribution and Engine segments fit this profile, acting as the primary source of funding for the rest of the portfolio.

The Distribution segment is showing strength in a mature service market, delivering a record Q3 2025 revenue of $3.2 billion, which represents a 7% increase year-over-year. This segment benefits from high market share in aftermarket and service needs, which are less cyclical than new equipment sales. Also, the Engine segment, the traditional core of Cummins Inc., maintains its high market share position, even as it navigates a challenging environment, reporting a Q3 2025 revenue decline of 11%.

Here's a quick look at the performance of these cash-generating units for the third quarter of 2025:

This robust cash generation is what allows Cummins Inc. to maintain shareholder returns even when other areas, like Accelera, are taking charges. The company demonstrated this commitment by raising the quarterly common stock cash dividend from $1.82 to $2.00 per share. This move marks the 16th consecutive year of dividend increases, a clear sign that the cash cows are doing their job.

The underlying cash flow supports these distributions. For the third quarter of 2025, Cummins generated operating cash flow of $1.31 billion, more than double the $640 million generated in Q3 2024. This significant cash infusion helps cover corporate overhead and fund investments elsewhere. Still, you need to watch the Components segment; while it has a strong market position, it is feeling the cyclical pressure, reporting a revenue decrease of 15% to $2.3 billion in Q3 2025 due to lower on-highway demand.

You should review the working capital efficiency across these segments to see where further passive 'milking' can occur. Finance: draft 13-week cash view by Friday.

Cummins Inc. (CMI) - BCG Matrix: Dogs

You're looking at the parts of Cummins Inc. (CMI) that are struggling to gain traction in slow-moving markets, the classic 'Dogs' in the Boston Consulting Group Matrix. These are the areas where market share is low, and the market itself isn't expanding much, tying up capital that could go elsewhere. Honestly, for these units, expensive turn-around plans rarely pay off; divestiture is often the cleaner path.

The most prominent example here is the business tied to the North American heavy- and medium-duty truck engine markets, which are deep in a persistent cyclical downturn. This isn't a surprise; truck orders were already at multi-year lows, and uncertainty around trade and regulatory policies is keeping customers on the sidelines. We're seeing this directly reflected in the Engine segment's performance.

The Engine segment's Q3 2025 revenue decline of 11% clearly reflects this low-growth, low-demand environment. For the third quarter of 2025, this segment brought in revenues of $2.6 billion, a significant drop from the $427 million in EBITDA it generated in Q3 2024, falling to just $261 million, or a 10.0% margin. This segment's North American revenue specifically decreased by 12%. What this estimate hides is that management is hoping demand is near bottoming in Q4 2025, but softness could pressure profits through 2026.

Here's a quick look at the Engine Segment's Q3 2025 pressure:

Another unit firmly in the Dog quadrant, or at least facing severe headwinds suggesting it, is the Electrolyzer business within Accelera. Due to significantly lower demand expectations, driven by policy shifts, Cummins announced it is undertaking a strategic review of this entire sub-segment. This unit is definitely consuming cash rather than generating it.

This sub-segment incurred a $240 million non-cash charge in Q3 2025, a clear drag on performance. This charge was composed of a $210-million goodwill impairment and a $30-million inventory write-down. For context, the entire Accelera segment recorded a negative EBITDA of $336 million in the quarter. To be fair, Accelera's total sales were $121 million, up 10% year-over-year, largely thanks to eMobility demand, but the electrolyzer outlook is what triggered the review.

The situation for the Electrolyzer business can be summarized by its financial impact:

• Non-cash charges recognized in Q3 2025: $240 million.
• Goodwill impairment component: $210 million.
• Inventory write-down component: $30 million.
• Accelera Segment Q3 2025 Negative EBITDA: $336 million.
• Accelera Segment Q3 2025 Sales: $121 million.

The decision to review the electrolyser operations signals that management views the current market fundamentals for this specific technology as not justifying current investment levels, aligning perfectly with the Dog classification where divestiture is a prime candidate. Finance: draft the initial divestiture cost-benefit analysis for Accelera by next Wednesday.

Cummins Inc. (CMI) - BCG Matrix: Question Marks

You're looking at the Accelera segment, Cummins Inc.'s unit dedicated to zero-emissions technologies, which includes fuel cells and electric powertrains. This area represents the classic Question Mark in the portfolio: high market growth potential, but currently holding a low market share, meaning it consumes significant cash.

The financial reality for Accelera in the third quarter of 2025 shows this cash consumption clearly. Revenues for the segment were $121 million, representing a 10% increase year-over-year due to higher eMobility demand. Despite this revenue growth, the segment is still operating at a loss, which is expected for a new technology business building out its market presence.

Here's a quick look at the key Q3 2025 figures for this high-growth, low-share unit:

The operational loss, measured by adjusted EBITDA, was $(96) million for the quarter. To be fair, the reported results were heavily impacted by $240 million in non-cash charges related to the electrolyzer business, reflecting policy-driven shifts in hydrogen adoption expectations. These investments are necessary to gain traction in emerging markets, but they drain cash now.

The strategic challenge for Accelera is clear: it needs to rapidly capture market share to transition from a Question Mark to a Star. If investment doesn't translate into a significantly larger share of the zero-emissions market, these units risk becoming Dogs.

The path forward requires heavy, sustained investment. You should note the following about the segment's trajectory:

• The previous goal for the Accelera business to reach break-even status in 2027 is no longer expected to be met.
• The company is pacing its investment in electrolyzers amid slowing customer demand and uncertainty around incentives.
• Investment is being focused on the most promising paths within the zero-emissions portfolio to ensure long-term success.
• A strategic review of the electrolyzer business was initiated due to significantly weaker demand prospects.

The decision for Cummins Inc. here is whether to double down on investment to secure future market leadership or to divest from areas showing slower-than-anticipated adoption. Finance: draft the 2026 capital allocation plan prioritizing Accelera investment milestones by Friday.