Back to top

Value

There's been no slowdown in the agriculture sector. CNH Global N.V. (CNH) is expected to grow earnings by the double digits for the second year in a row. This Zacks #1 Rank (Strong Buy) still has attractive valuations, with a forward P/E of 10.1.

CNH Global manufactures agriculture and construction equipment for customers in 170 countries under the Case and New Holland brands. It is a majority owned subsidiary of Fiat.

2012 Zacks Consensus Estimate Rises

In just the last week, one estimate has been revised higher for the full year. This is a bullish signal ahead of the expected Apr 25 earnings report.

The 2012 Zacks Consensus has moved to $4.32 from $4.30 in that time.

That is 2012 earnings growth of 12.7%.

This is coming on the heels of 2011's strong earning growth of 83.2%.

Strong Earnings Surprise Track Record

On Jan 31, CNH Global reported its fourth quarter results and surprised on the Zacks Consensus Estimate for the 9th consecutive quarter.

Earnings per share were 78 cents compared to the consensus of 72 cents.

Net sales for the year jumped 25% to $18.1 billion as both the agriculture and construction segments saw strong results. The Agricultural equipment segment saw sales rise 23% to $14.2 billion while the Construction equipment segment saw sales climb 32% to $3.9 billion. Ag sales were up 24% in the fourth quarter.

North America continued to be its largest market with 42% of sales. EAME & CIS was 32%, Latin America was 16% and APAC was 10% of sales.

The agriculture equipment market has been strong in North America as farmers have been spending their record 2011 incomes.

Still a Value

Shares of CNH have rebounded in 2012 but haven't retaken the 2011 highs.

CNH still has attractive valuations.

In addition to a P/E of just 10.1, it has a price-to-sales ratio of 0.5. A P/S ratio under 1.0 usually means a company is undervalued.

The price-to-book ratio is also flashing "value". CNH has a P/B ratio of 1.3 which is well under the 3.0 cut off I use for value.

CNH has other solid fundamentals, including a 1-year return on equity (ROE) of 11.6%.

The agriculture stocks have been overlooked by many investors in 2012. We'll find out next week whether that's been a mistake.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SUPER MICRO… SMCI 27.00 +10.25%
CANADIAN SO… CSIQ 38.34 +8.18%
BANCO DO BR… BDORY 16.78 +8.05%
CENTURY ALU… CENX 26.97 +7.97%
WILLDAN GRO… WLDN 11.38 +5.86%