Cummins Inc. (CMI) vs UnitedHealth Group Incorporated (UNH): Which Is the Better Buy in 2026?
As of 2026-06-19, CMI is fairly valued at $717, with a DCF intrinsic value of $671 and a margin of safety of -7%. UNH is fairly valued at $401, with an intrinsic value of $376 and a margin of safety of -7%. Of the two, UNH has the wider margin of safety.
Rewards
- ★Free cash flow has grown at a 31.6% CAGR over the past 4 years, demonstrating strong earnings power growth.
- ★Each dollar of retained earnings has created $1.68 of earning power — management is creating shareholder value.
- ★Altman Z-Score of 4.61 indicates very low bankruptcy risk — the company is firmly in the safe zone.
- ★UnitedHealth Group Incorporated scores 73/100 on the Economic Moat Score (Wide Moat), with revenue predictability as the strongest competitive dimension.
Risks
- ⚠FCF yield of 2.4% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
- ⚠Trailing P/E of 37.2x is 50% above the historical average of 24.8x — the stock trades at a premium to its own history.
- ⚠7 insider sales totaling $9.4M with no purchases in the past 3 months — insiders are reducing their exposure.
- ⚠ROIC has declined by 6.9 percentage points over the past 4 years, which may signal competitive erosion.
- ⚠Gross margin of 18.8% is low, suggesting a competitive or commodity-like market with limited pricing power.
- ⚠Free cash flow has declined at a 11.8% CAGR over the past 4 years — a concerning trend.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $717?
The market implies +15.9% Owner Earnings growth, below historical trends — potential opportunity.
Standard FCF implies a more demanding +18.3%, reflecting heavy growth investment expected to generate future returns.
What growth rate is the market pricing in at $401?
The market implies +14.1% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +9.8%, reflecting heavy growth investment.
Economic Moat Score
Learn more →Narrow moat with reinvestment efficiency as the key competitive advantage. Improving revenue predictability would strengthen the moat.
Wide moat driven primarily by revenue predictability. Margin Stability is the area most vulnerable to competitive pressure.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is optimistic — be cautious and ensure you have a margin of safety"
"Market is optimistic — be cautious and ensure you have a margin of safety"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: CMI vs UNH
Is Cummins Inc. or UnitedHealth Group Incorporated more undervalued in 2026?▼
Based on our discounted cash flow model, UNH trades at a -6.6% margin of safety (intrinsic value $376 vs. price $401), compared to CMI's -6.9% margin of safety (intrinsic $671 vs. $717).
Which stock has a wider economic moat, Cummins Inc. or UnitedHealth Group Incorporated?▼
UNH scores 73/100 (Wide moat), while CMI scores 55/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is UnitedHealth Group Incorporated in financial distress?▼
UNH's Altman Z-Score of 2.9 places it in the Grey zone, signaling elevated bankruptcy risk. CMI scores 4.6 (Safe zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.
Which company has better free cash flow, Cummins Inc. or UnitedHealth Group Incorporated?▼
UnitedHealth Group Incorporated (UNH) generates a 4.9% free cash flow yield, compared to Cummins Inc.'s 2.4%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.
Which stock has higher return on invested capital, Cummins Inc. or UnitedHealth Group Incorporated?▼
UNH earns 15.6% ROIC versus CMI's 12.1%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Which dividend is safer, Cummins Inc.'s or UnitedHealth Group Incorporated's?▼
CMI's dividend earns a safety score of 94/100 (Very Safe), compared to UNH's 84/100 (Very Safe). CMI has raised its dividend for 3 consecutive years.