Cummins Inc. (CMI) — Q2 2026 Earnings Preview

1. Earnings Preview

Key Takeaway: Setup leans toward a beat — consensus has moved up since Q1 but management's raised guidance and accelerating data center demand likely leave room for another positive surprise; the biggest swing factor is whether Power Systems EBITDA margin can sustain near Q1's record level or moderates as guided.

Heading into Q2 2026, the bar for Cummins is elevated but not unreachable: consensus sits at ~$9.31B in revenue and ~$7.20 in operating EPS, both of which management effectively pre-validated when it raised full-year guidance materially on the Q1 call and reiterated confidence in a "strong Q2" with the rest of the year "as good or better than Q1." The estimate trajectory has been constructive — revisions moved higher after the May 5 print and held — but the stock has underperformed XLI by roughly 10 percentage points since last earnings (CMI –4% vs. XLI +6%), suggesting the market is pricing in some mean-reversion risk on Power Systems margins after Q1's record 29.5% EBITDA margin, which management itself flagged would moderate due to one-time cost recoveries and uneven tariff timing. The key wildcard is the

EPA NOx regulatory clarification announced by PACCAR in late July: the EPA extended the timeline for 35mg NOx engines and introduced a Non-Conformance Penalty (NCP) of ~$6,000–$7,000/truck for 2027, which is likely lower than the cost of fully compliant engines — this could pull forward pre-buy demand into H2 2026 and benefit CMI's Engine and Components segments more than consensus currently models, representing the most meaningful upside catalyst for the print.

2. KPIs & Consensus Expectations

Key Takeaway: Consensus is a moderate bar — revenue and EPS estimates have risen since Q1 but remain below the implied run-rate of management's raised full-year guidance.

Power Systems EBITDA margin is the bigger swing factor: consensus at ~17.9% for Q2 is well below Q1's record 29.5%, reflecting management's own guidance for moderation, but any upside surprise there would drive the stock. Engine segment volume recovery (truck pre-buy) is the second key variable.

Table 1 — Q2 2026 Current Quarter Snapshot

Sources: Visible Alpha Consensus and Actuals Data — Net sales, EBITDA, EBITDA margin, EPS – diluted – operating, Sales – Power Systems, Sales – Engine, Sales – Distribution, Sales – Components, EBITDA – Power Systems – Operating, EBITDA – Engines – Operating, Free cash flow. Q1 2026 earnings call transcript (May 5, 2026) for guidance ranges.

Table 2 — Beat/Miss History (Last 8 Quarters) — Top 2 KPIs: Net Sales & Adj. Operating EPS

Pattern: CMI has beaten consensus on both Net Sales and Adj. Operating EPS in each of the last 8 quarters, with EPS beats averaging ~17% — the bar is consistently set too low, and the pattern of management under-guiding and over-delivering is well-established.

Source: Visible Alpha Consensus and Actuals Data.

3. Guidance & Commentary Evolution

Key Takeaway: Guidance was raised materially at Q1 earnings (May 5) and further reinforced at the May 21 Analyst Day with raised 2030 targets; no subsequent downward revisions. Tone is

notably more confident than at Q4 2025 earnings, driven by faster-than-expected truck recovery, record Power Systems margins, and accelerating data center demand.

Baseline: Q1 2026 Earnings Call, May 5, 2026. Analyst Day held May 21, 2026 provided additional color and raised 2030 targets but did not change FY 2026 guidance ranges.

Sources: CMI Q1 2026 Earnings Call Transcript (May 5, 2026); CMI Analyst Day Transcript (May 21, 2026); Visible Alpha Consensus and Actuals Data.

4. Guidance vs. Estimate Revision Tracker

Key Takeaway: Estimates have moved

higher since Q1 earnings across all key KPIs, tracking management's raised guidance. The gap between current consensus and the top end of guidance is narrow, suggesting limited cushion for further upside surprises on revenue — but

EPS estimates remain below the implied run-rate of the full-year guidance, leaving room for another EPS beat if Power Systems margins hold above the guided range.

Note: Q2-specific estimates drifted slightly lower from the immediate post-Q1 baseline (likely reflecting Power Systems margin moderation expectations), while FY estimates held or ticked up. The slight downward drift in Q2 EPS consensus from $7.39 to $7.20 creates a lower bar relative to the initial post-Q1 enthusiasm — a modest setup tailwind.

Source: Visible Alpha Consensus and Actuals Data. As-of date: May 10, 2026 (5 trading days post Q1 2026 earnings).

5. Stock Performance

Key Takeaway: CMI has

significantly underperformed XLI since Q1 earnings (−4% vs. +6%), despite the strong beat and raised guidance — suggesting the market is skeptical of Power Systems margin sustainability and/or pricing in the B platform delay and pre-buy timing uncertainty. The underperformance is sentiment/multiple-driven, not revision-driven, as estimates have held up.

CMI vs. XLI (Industrials ETF) — Indexed to 100 at Q1 2026 Earnings (May 5, 2026). CMI: −4% vs. XLI: +6% through July 31, 2026. Key events marked: Q1 Earnings (May 5) and Analyst Day (May 21). Source: Stock Price Data.

Key observations:

• May 5–14 (post-earnings surge): CMI surged from $675 to $716 (+6%) in the week following Q1 earnings on the strong beat and raised guidance, outperforming XLI.
• May 15–June 10 (Analyst Day selloff): CMI gave back all post-earnings gains and more, falling from $716 to $631 (−12%) around and after the May 21 Analyst Day. The selloff likely reflected profit-taking and concerns about the B platform delay and the 2027 pre-buy/pause dynamic highlighted at the Analyst Day.
• June 11–June 25 (recovery): CMI recovered to $728 as broader industrials rallied and data center demand narrative strengthened.
• July (renewed weakness): CMI pulled back from $728 to $606 on July 29 (−17% from June peak), likely on pre-earnings caution and sector rotation, before recovering to ~$648 by August 4. XLI held up much better over this period.
• Net result: CMI −4% vs. XLI +6% since Q1 earnings — a ~10 percentage point underperformance. The stock is entering Q2 earnings from a position of relative weakness, which historically has been a setup for outperformance if the print is solid.

Source: Stock Price Data (Yahoo Finance). Sector ETF: XLI (iShares U.S. Industrials ETF), appropriate for CMI’s industrial machinery sub-sector.

6. Peer Commentaries — Q2 2026 Read-Throughs

Key Takeaway: Peer commentary from Q2 2026 earnings (reported July–August 2026) is

broadly constructive for CMI: PACCAR confirms the NA heavy-duty truck market is tracking to ~250K units with H2 ramp accelerating and pre-buy dynamics strengthening; Eaton confirms data center demand is growing faster than expected with 65% growth in Electrical Americas; ITW confirms industrial demand is strengthening with raised guidance. The only cautionary note is Emerson’s Strait of Hormuz supply chain disruption, which is manageable for CMI given its domestic manufacturing footprint.

Note: Only commentary from peers reporting on Q2 2026 (calendar April–June 2026) or post-CMI Q1 earnings (after May 5, 2026) is included below. Q4 2025 or Q1 2026 peer results are excluded.

PACCAR (PCAR) — Q2 2026 Earnings (Reported July 28, 2026)

Relevance: PACCAR is CMI’s largest OEM customer for heavy-duty truck engines (Kenworth/Peterbilt). PCAR’s Q2 commentary is the most direct read-through for CMI’s Engine segment.

• NA Heavy-Duty Truck Market tracking to ~250,000 units FY 2026: PCAR confirmed H1 retail sales of 105,000 trucks and expects H2 of ~145,000, for a full-year total of ~250,000 units — exactly at the top end of CMI’s raised guidance range.
• H2 ramp is accelerating and supply-constrained: PCAR is "mostly full for the year, approximately 90% full" and expects to sell out of build slots in the next 1–2 months, with carry-over into 2027. Some supplier constraints are emerging (a few hundred trucks not delivered in Q2 due to supply), which is a mild read-through risk for CMI’s Engine segment volumes.
• EPA NOx clarification is a significant positive for pre-buy: The EPA clarified that customers can purchase current-generation engines in 2027 with a Non-Conformance Penalty (NCP) of ~$6,000–$7,000/truck — likely lower than the cost of fully compliant 35mg engines. PCAR expects this to have a "positive impact on the size and strength of next year’s truck market." CMI plans to sell current X15/X10 engines in 2027 alongside the new 35mg engines, and the NCP structure should support a healthy pre-buy in H2 2026 and into 2027.
• 232 tariff situation is "durable" and stable: PCAR noted a net tariff benefit in Q2 from local-for-local production and expects a similar position in Q3. The 232 tariff is described as durable, providing a stable operating environment — consistent with CMI’s own characterization of tariffs as immaterial.
• Reshoring and local-for-local trends are positive for trucks: PCAR highlighted that reshoring activity in the industrial base is "good for trucks and especially good for Paccar" — a broader demand tailwind for CMI’s Engine segment.

Read-through verdict: Strongly positive for CMI Engine and Components segments. The H2 ramp is real, the pre-buy is building, and the NCP structure is more favorable than feared. Supply constraints are a minor risk but manageable.

Source: PCAR Q2 2026 Earnings Call Transcript (July 28, 2026).

Eaton (ETN) — Q2 2026 Earnings (Reported July 31, 2026)

Relevance: Eaton is CMI’s closest peer in data center power infrastructure. ETN’s Electrical Americas segment (backup power, switchgear, UPS) competes with and complements CMI’s Power Systems segment (diesel gensets). ETN’s data center commentary is the most direct read-through for CMI’s Power Systems demand outlook.

• Data center demand is growing faster than expected — again: ETN’s Electrical Americas saw 65% organic growth in data centers in Q2, and the CEO stated demand "continues to grow even faster than we estimated in our initial guidance, and today even stronger than we expected three months ago." This is a strong positive read-through for CMI’s Power Systems segment, which is also levered to data center backup power.
• Total US data center backlog has grown to 307 GW (15 years of backlog): Up from 12 years in the prior update. Only ~20% converts near-term; the majority translates to 2028+ deliveries. This confirms the multi-year duration of the data center demand cycle that underpins CMI’s 2030 targets ($9B+ data center revenue).
• Capacity ramp is the binding constraint, not demand: ETN is investing over $1B in capacity expansion and noted the "bulk of the disruption" from ramp-ups occurred in Q4 2025 and Q1 2026. Q1–Q2 was the largest quarterly ramp in production output, and they overdelivered. This mirrors CMI’s own capacity expansion narrative (doubling large genset capacity, $450M additional investment announced at Analyst Day).
• Tariff impact is immaterial for H2 2026: ETN confirmed tariff impact for H2 is "immaterial" and refunds are embedded in guidance — consistent with CMI’s own characterization.
• Total addressable market growing ~10% this year; orders accelerating broadly: Total electrical orders increased mid-to-high teens across commercial, institutional, utility, industrial, and even residential markets. Machine OEM orders were up mid-30s. ETN is "confidently entering the back half of 2026 and very well positioned to extend momentum into 2027."

Read-through verdict: Strongly positive for CMI Power Systems. Data center demand is accelerating, not decelerating, and the capacity ramp is on track. The 307 GW backlog figure validates CMI’s long-term investment thesis.

Source: ETN Q2 2026 Earnings Call Transcript (July 31, 2026).

Illinois Tool Works (ITW) — Q2 2026 Earnings (Reported July 28, 2026)

Relevance: ITW is a broad industrial bellwether. Its welding and industrial segments provide a read on general industrial demand trends relevant to CMI’s Distribution and Components segments.

• Industrial demand is strengthening broadly: ITW’s welding segment delivered record top-line results with 14% organic growth, driven by 19% equipment sales growth. North America (85% of welding) led with 19% growth across infrastructure, energy, aerospace, defense, and fabrication — including data center construction. This is a positive read for CMI’s Distribution segment, which serves similar end markets.
• Raising full-year guidance with all seven segments expected to deliver positive organic growth and margin expansion: ITW’s raised guidance implies sustained organic growth of 4.5% in H2 2026. The company is "very confident going into the back half of the year based on order rates and customer feedback."
• Tariff recovery is ongoing but not yet complete: ITW noted price increases more than offset higher raw material costs in dollar terms, but timing lags temporarily diluted margins by 40 bps in Q2. The company expects to recover this over time. ITW does not expect any material recovery from tariff refunds. This is a mild caution for CMI’s Components segment, which may face similar timing lags.
• Inflationary pressures in crude oil derivatives, logistics, and electronic components: ITW flagged resin purchases, freight costs, and electronic components as inflationary. These are relevant cost inputs for CMI’s Components segment.

Read-through verdict: Moderately positive for CMI Distribution and Components. Broad industrial demand is healthy, but cost inflation and tariff timing lags are a mild margin headwind to watch.

Source: ITW Q2 2026 Earnings Call Transcript (July 28, 2026).

Emerson Electric (EMR) — Q2 FY2026 Earnings (Reported May 5, 2026)

Relevance: Emerson’s process automation and power segments provide a read on industrial automation demand and data center behind-the-meter power trends. Note: EMR’s fiscal Q2 2026 ended March 31, 2026 — this is post-CMI’s Q1 earnings date and covers the same calendar period as CMI’s Q1 2026.

• Data center behind-the-meter power demand is building: EMR’s Power segment was up 23% with "healthy investment in plant modernizations, lifetime extensions and behind-the-meter generation for data centers." EMR saw some behind-the-meter opportunities in Q2 and expects more in H2 2026 and into 2027 — a positive read for CMI’s Power Systems prime power ambitions.
• North America remains strong; Europe and China are soft: EMR expects the U.S. to grow high single digits for the year. China is now expected to be down mid-single digits due to weakness in the chemical industry. This is a mixed read for CMI — positive for NA Distribution, but CMI’s China data center exposure (84% growth in Q1) is in power generation, not chemicals, so the read-through is limited.
• Backlog up 9% YoY; orders growing 5% — H2 confidence is high: EMR is confident in its H2 2026 plans based on orders momentum and backlog visibility. Mid-single-digit orders are described as sustainable for the remainder of 2026.
• Strait of Hormuz closure caused 1-point impact to underlying sales in Q2: EMR flagged significant disruptions to ocean, air, and ground logistics from the Strait of Hormuz closure, restricting imports of components for instruments and valves. While the cost impact is described as manageable, this is a supply chain risk to monitor for CMI’s international Distribution and Components segments.
• Section 232 and freight cost headwinds offset IEEPA tariff removal: EMR expects a net neutral impact from IEEPA tariff removal as benefits are offset by Section 232 and freight cost increases — consistent with CMI’s own tariff characterization.

Read-through verdict: Moderately positive for CMI Power Systems (data center behind-the-meter demand building) and NA Distribution. The Strait of Hormuz supply chain disruption is a watch item for international segments.

Source: EMR Q2 FY2026 Earnings Call Transcript (May 5, 2026).

Deere & Company (DE) — Q2 FY2026 Earnings (Reported May 21, 2026)

Relevance: Deere provides a read on construction and off-highway equipment demand, relevant to CMI’s Engine segment (off-highway/construction engines) and global construction market outlook.

• Construction demand is robust, supported by data center investments: DE described construction demand as "robust, supported by infrastructure spending, rental activity and accelerating data center investments." Data center construction is expected to top $100B in 2026 with additional double-digit growth into 2027. This is a positive read for CMI’s off-highway engine volumes.
• US/Canada construction equipment expected up ~5%; global road building up ~10%: DE’s C&F segment net sales are now forecast up ~20% for FY 2026. This is a positive read for CMI’s construction/off-highway engine demand.
• Tariff refund of $272M was a one-time tailwind; underlying tariff exposure remains ~$1.2B: DE received a $272M IEEPA tariff refund in Q2 that lifted margins by ~2.5 points. Net of refunds, DE still faces ~$900M of tariff costs for the year. This is a contrast to CMI’s more favorable tariff position (immaterial net impact), highlighting CMI’s superior tariff management.
• Material and freight cost inflation is building: DE noted "some inflation come in over the last 2–3 months" in materials and freight. This is a mild cost headwind to monitor for CMI’s Components and Engine segments.

Read-through verdict: Moderately positive for CMI’s off-highway/construction engine volumes. Data center construction is a demand driver for both companies. CMI’s tariff position looks superior to DE’s.

Source: DE Q2 FY2026 Earnings Call Transcript (May 21, 2026).

7. Material News & Developments

Key Takeaway: The most important development since Q1 earnings is the

EPA NOx regulatory clarification (late July 2026) — the NCP structure for 2027 is more favorable than feared and should accelerate pre-buy demand into H2 2026, directly benefiting CMI’s Engine and Components segments in Q2 and beyond.

• July 2026 — EPA clarifies NOx regulation: NCP of ~$6K–$7K/truck for 2027 (Positive): Per PCAR’s Q2 2026 earnings call (July 28), the EPA clarified that customers can purchase current-generation engines in 2027 with a Non-Conformance Penalty rather than requiring fully compliant 35mg engines. The NCP is expected to be lower than the cost of full compliance, which should support a healthy pre-buy in H2 2026 and a stronger 2027 truck market. CMI plans to sell current X15/X10 engines in 2027 alongside new 35mg engines. This is the most significant positive development for CMI’s Engine segment since Q1 earnings.
• May 21, 2026 — CMI Analyst Day: Raised 2030 targets; $450M capacity investment announced (Positive): CMI raised its 2030 revenue target to $45B–$50B (from $43B–$48B) and set an EBITDA margin target exceeding 20% (from 17%–18%). The company announced an additional $450M investment to expand high-horsepower engine and genset capacity by 20 GW (to 55 GW total by 2030). Data center revenue is projected to grow from $5B (2026 midpoint) to above $9B by 2030. A new mining engine for the 100-tonne truck market and a new large megawatt natural gas engine (up to 4 MW prime power, launching 2028) were also announced.
• May 21, 2026 — CMI Analyst Day: Production ramp to 400 engines/day by end of June (Positive): Management disclosed that CMI started 2026 making 240–250 heavy-duty engines/day for the NA market and expected to reach 400/day by end of June 2026. This confirms the Engine segment volume ramp is well underway heading into Q2 results.
• May 14, 2026 — CMI Annual Shareholder Meeting: Board supported on key votes (Neutral): Shareholders backed the board on key votes and rejected governance proposals. No material impact on operations or strategy.
• Q1 2026 (May 5) — Accelera: Low-pressure fuel cell business sold to Alstom; electrolyzer wind-down (Positive): The sale of the fuel cell business and wind-down of electrolyzer commitments are reducing Accelera’s cash burn. Net losses are now guided to $(270)M–$(300)M vs. prior $(325)M–$(355)M. Focus is narrowed to battery electric powertrain with some customer wins. This removes a key overhang on the stock.
• Ongoing — Data center demand acceleration (Positive): Multiple peers (ETN, EMR, DE) confirmed accelerating data center construction and power demand in their Q2 2026 results. ETN’s 307 GW US data center backlog (15 years at 2025 build rates) validates the multi-year duration of CMI’s Power Systems growth opportunity.
• Ongoing — Strait of Hormuz closure (Watch item): EMR flagged significant logistics disruptions from the Strait of Hormuz closure in Q2, causing a 1-point impact to underlying sales. CMI’s international Distribution and Components segments could face similar freight cost and component availability pressures, though CMI’s domestic manufacturing footprint provides some insulation.
• Ongoing — Analyst upgrades/PT changes: Truist Financial maintained its Buy rating on CMI as of July 8, 2026 (per internet search). No material downgrades identified in the period.

Sources: PCAR Q2 2026 Earnings Call (July 28, 2026); CMI Analyst Day Transcript (May 21, 2026); CMI Q1 2026 Earnings Call (May 5, 2026); CMI 8-K (May 14, 2026); ETN Q2 2026 Earnings Call (July 31, 2026); EMR Q2 FY2026 Earnings Call (May 5, 2026); Internet search.

8. Insider Transaction Activity

Key Takeaway: Insider activity since Q1 earnings is dominated by

routine post-earnings equity award grants and associated tax-withholding sales — all clustered in the May 8–19 window immediately following the Q1 print. There are no discretionary open-market buys or unusually large discretionary sales. The pattern is consistent with standard equity compensation mechanics and carries no negative signal.

Notable item: Jennifer Bush (VP & President – Power Systems) sold 5,000 shares on May 12, 2026 — the largest single sale in the period and the only one that could be characterized as potentially discretionary (no 10b5-1 plan flag in the data). At ~$700/share, this represents approximately $3.5M in proceeds. However, this occurred immediately after the Q1 earnings beat and Analyst Day, when the stock was near its post-earnings peak, and is consistent with opportunistic profit-taking rather than a negative signal about the business outlook. All other sales are small and consistent with tax-withholding on vested equity awards.

Source: Insider Transaction Data (SEC Form 4 filings, May 8–19, 2026).