NOTE 19. EARNINGS PER COMMON SHARE ATTRIBUTABLE TO CUMMINS INC.
We calculate basic earnings per share (EPS) of common stock by dividing net income attributable to Cummins Inc. by the weighted-average number of common shares outstanding for the period. The calculation of diluted EPS assumes the issuance of common stock for all potentially dilutive share equivalents outstanding, which is calculated using the treasury-stock method for share-based awards. Following are the computations for basic and diluted earnings per share:
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| | | Years ended December 31, |
| In millions, except per share amounts | | 2025 | | 2024 | | 2023 |
| Net income attributable to Cummins Inc. | | $ | 2,843 | | | $ | 3,946 | | | $ | 735 | |
| | | | | | |
| Weighted-average common shares outstanding | | | | | | |
| Basic | | 137.9 | | | 138.2 | | | 141.7 | |
| Dilutive effect of stock compensation awards | | 0.8 | | | 0.9 | | | 1.0 | |
| Diluted | | 138.7 | | | 139.1 | | | 142.7 | |
| Earnings per common share attributable to Cummins Inc. | | | | | | |
| Basic | | $ | 20.62 | | | $ | 28.55 | | | $ | 5.19 | |
| Diluted | | 20.50 | | | 28.37 | | | 5.15 | |
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The weighted-average diluted common shares outstanding exclude the anti-dilutive effect of certain stock options. The options excluded from diluted earnings per share were as follows:
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| | Years ended December 31, |
| | 2025 | | 2024 | | 2023 |
| Options excluded | | 3,825 | | | 1,467 | | | 10,587 | |
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About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.