What changed
$CMI — Designs and manufactures diesel and natural gas engines.
🎯 Q1 FY26 | Rev $8B | EPS $4.71 vs $5.62 🔴 | Margin 11.3%
💡 Consensus expected EPS of $5.62, but actual was $4.71 (-16.25% miss). The market may be overly pessimistic on a cyclical slowdown, but the miss was driven by operating margin compression (11.3% vs prior 13.9%) and higher costs, not just one-time items.
🏢 Business Quality: 7/10 | Valuation: fair
📉 Reward/Risk: Upside 10% to $735 (if margins recover and P/E holds) vs downside 15% to $570 (if miss repeats). Ratio: 0.67x, unfavorable.
🔮 Catalyst: Next quarterly report (late July 2026): watch for revenue growth >3% YoY and operating margin recovery to >12%. Failure signal: margin stays below 11% or guidance cut.
💰 Entry: Ideal entry $600-$630 (10-15% below current). Current price $669 not attractive given miss and high P/E.
Also in play: $VALE $BHP $RIO $GLNCY $SCCO $CAT