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Why Is CNH (CNHI) Up 13.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for CNH Industrial (CNHI - Free Report) . Shares have added about 13.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CNH due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
CNH Industrial Beats on Q3 Earnings, Ups Sales View
CNH Industrial posted third-quarter 2022 adjusted earnings per share of 41 cents, which increased from 36 cents in the prior-year quarter and topped the Zacks Consensus Estimate of 32 cents. Higher-than-anticipated revenues across the Agricultural and the Financial Services segments resulted in this outperformance.
In the third quarter, consolidated revenues rose 23.9% from the year-ago level to $5,881 million and topped the consensus mark of $5,327 million. The company’s net sales from industrial activities came in at $5,396 million, up 24.4%, led by favorable pricing.
Segmental Performance
In the September quarter, net sales in the Agricultural segment grew 26% year over year to $4,501 million due to a favorable price realization and improved mix, mainly driven by the North America and South America regions. The metric also topped the Zacks Consensus Estimate of $4,060 million. The segment’s adjusted EBIT came in at $666 million, jumping 60.4% year over year and topping the consensus mark of $529 million. The adjusted EBIT margin increased to 14.8% from 11.6%.
The Construction segment’s sales grew 16% year over year to $895 million in the quarter, led by price realization and contribution from the Sampierana business. But revenues beat the Zacks Consensus Estimate of $844 million. Adjusted EBIT came in at $24 million, gaining 14.3% on the back of favorable volume and a positive price realization. Nonetheless, the figure lagged the consensus mark of $35 million. The adjusted EBIT margin was the same as the prior-year level of 2.7%.
The Financial Services segment revenues went up 19% to $482 million and topped the consensus mark of $460 million on higher used equipment sales, improved volumes and better base rates across all regions, especially in South America. Net income from the segment declined 10.4% to $86 million in the quarter under review.
Financial Details
CNH Industrial had cash and cash equivalents of $3,154 million as of Sep 30, 2022, down from $5,044 million as of Dec 31, 2021. The company’s debt totaled $20,922 million at the end of the third quarter of 2022, up from $20,897 million as of Dec 31, 2021. The firm had available liquidity of $8,645 million as of Sep 30, 2022.
CNH Industrial’s net cash provided by operating activities was $272 million, down from $673 million in the year-ago period. Free cash flow from industrial activities was $202 million in the quarter versus negative FCF of $70 million in the third quarter of 2021.
2022 Guidance
CNH Industrial revised its estimates for net sales from industrial activities (including currency-translation effects) for 2022. Sales are now expected to increase year over year in the band of 16-18% instead of 12-14% guided earlier. Its projections for free cash flow remain unchanged. The company continues to expect to generate more than $1 billion in free cash flow from industrial activities in 2022. R&D expenses and capex projections also remain the same at around $1.4 billion. SG&A expenses continue to be projected at lower than 7.5% of net sales.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, CNH has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CNH has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
CNH belongs to the Zacks Automotive - Foreign industry. Another stock from the same industry, Toyota Motor Corporation (TM - Free Report) , has gained 5.5% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Toyota Motor Corporation reported revenues of $66.77 billion in the last reported quarter, representing a year-over-year change of -2.6%. EPS of $2.30 for the same period compares with $4.09 a year ago.
Toyota Motor Corporation is expected to post earnings of $4.06 per share for the current quarter, representing a year-over-year change of -19.3%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Toyota Motor Corporation has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Why Is CNH (CNHI) Up 13.2% Since Last Earnings Report?
It has been about a month since the last earnings report for CNH Industrial (CNHI - Free Report) . Shares have added about 13.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CNH due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
CNH Industrial Beats on Q3 Earnings, Ups Sales View
CNH Industrial posted third-quarter 2022 adjusted earnings per share of 41 cents, which increased from 36 cents in the prior-year quarter and topped the Zacks Consensus Estimate of 32 cents. Higher-than-anticipated revenues across the Agricultural and the Financial Services segments resulted in this outperformance.
In the third quarter, consolidated revenues rose 23.9% from the year-ago level to $5,881 million and topped the consensus mark of $5,327 million. The company’s net sales from industrial activities came in at $5,396 million, up 24.4%, led by favorable pricing.
Segmental Performance
In the September quarter, net sales in the Agricultural segment grew 26% year over year to $4,501 million due to a favorable price realization and improved mix, mainly driven by the North America and South America regions. The metric also topped the Zacks Consensus Estimate of $4,060 million. The segment’s adjusted EBIT came in at $666 million, jumping 60.4% year over year and topping the consensus mark of $529 million. The adjusted EBIT margin increased to 14.8% from 11.6%.
The Construction segment’s sales grew 16% year over year to $895 million in the quarter, led by price realization and contribution from the Sampierana business. But revenues beat the Zacks Consensus Estimate of $844 million. Adjusted EBIT came in at $24 million, gaining 14.3% on the back of favorable volume and a positive price realization. Nonetheless, the figure lagged the consensus mark of $35 million. The adjusted EBIT margin was the same as the prior-year level of 2.7%.
The Financial Services segment revenues went up 19% to $482 million and topped the consensus mark of $460 million on higher used equipment sales, improved volumes and better base rates across all regions, especially in South America. Net income from the segment declined 10.4% to $86 million in the quarter under review.
Financial Details
CNH Industrial had cash and cash equivalents of $3,154 million as of Sep 30, 2022, down from $5,044 million as of Dec 31, 2021. The company’s debt totaled $20,922 million at the end of the third quarter of 2022, up from $20,897 million as of Dec 31, 2021. The firm had available liquidity of $8,645 million as of Sep 30, 2022.
CNH Industrial’s net cash provided by operating activities was $272 million, down from $673 million in the year-ago period. Free cash flow from industrial activities was $202 million in the quarter versus negative FCF of $70 million in the third quarter of 2021.
2022 Guidance
CNH Industrial revised its estimates for net sales from industrial activities (including currency-translation effects) for 2022. Sales are now expected to increase year over year in the band of 16-18% instead of 12-14% guided earlier. Its projections for free cash flow remain unchanged. The company continues to expect to generate more than $1 billion in free cash flow from industrial activities in 2022. R&D expenses and capex projections also remain the same at around $1.4 billion. SG&A expenses continue to be projected at lower than 7.5% of net sales.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, CNH has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CNH has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
CNH belongs to the Zacks Automotive - Foreign industry. Another stock from the same industry, Toyota Motor Corporation (TM - Free Report) , has gained 5.5% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Toyota Motor Corporation reported revenues of $66.77 billion in the last reported quarter, representing a year-over-year change of -2.6%. EPS of $2.30 for the same period compares with $4.09 a year ago.
Toyota Motor Corporation is expected to post earnings of $4.06 per share for the current quarter, representing a year-over-year change of -19.3%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Toyota Motor Corporation has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.