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CNH (CNHI) Up 6.9% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for CNH Industrial (CNHI - Free Report) . Shares have added about 6.9% 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 its most recent earnings report in order to get a better handle on the important catalysts.
CNH Industrial Q3 Earnings In-Line With Estimates
CNH Industrial delivered third-quarter 2023 adjusted earnings per share of 42 cents, which increased from 41 cents in the prior-year quarter and matched the Zacks Consensus Estimate.
In the third quarter, consolidated revenues rose 2% from the year-ago level to $5,986 million. The company’s net sales from industrial activities came in at $5,332 million, down 1% due to lower industry demand in Agriculture. The metric also lagged the Zacks Consensus Estimate of $5,767 million.
Segmental Performance
In the third quarter, net sales in the Agriculture segment fell 2.6% year over year to $4,384 million due to lower industry volume. The metric also missed our estimate of $4,751 million. The segment’s adjusted EBIT came in at $672 million, rising 0.1% year over year but missing our estimate of $732 million. The adjusted EBIT margin increased to 15.3% from 14.8%, led by a better mix, a higher gross margin and a slight reduction in SG&A expenses.
The Construction segment’s sales grew 6% year over year to $948 million in the quarter, led by favorable price realization and improved volume and mix in North America. However, the metric lagged our estimate of $968.1 million. Adjusted EBIT came in at $60 million, gaining 150% on favorable mix and a positive price realization. The figure missed our estimate of $66 million. The adjusted EBIT margin increased to 6.3% from 2.7%.
The Financial Services segment’s revenues went up 35% to $653 million, topping our estimate of $567.9 million on improved volumes and better base rates across all regions. Net income from the segment remained flat at $86 million.
Financial Details
CNH Industrial had cash and cash equivalents of $2,979 million as of Sep 30, 2023, down from $4,376 million as of Dec 31, 2022.
The company’s debt totaled $24,958 million as of Sep 30, 2023, up from $22,962 million as of Dec 31, 2022.
The company’s net cash used by operating activities was $608 million, down from $886 million in the year-ago period.
Free cash flow absorbed from industrial activities was $127 million in the quarter versus free cash flow of $202 million in the third quarter of 2022.
Updated Guidance 2023
For Industrial activities, sales are expected to increase in the band of 3-6% year over year, down from a prior estimate of 8-11%. The projections for free cash flow from industrial activities are in the range of $1-$1.2 billion, down from prior guidance of $1.3-$1.5 billion. R&D expenses and capex projections are pegged at $1.6 billion. SG&A expenses are expected to grow by no more than 5% vs 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -17.07% due to these changes.
VGM Scores
Currently, CNH has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, 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 D. 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. It's no surprise CNH has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
CNH belongs to the Zacks Manufacturing - Farm Equipment industry. Another stock from the same industry, Agco (AGCO - Free Report) , has gained 0.9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Agco reported revenues of $3.46 billion in the last reported quarter, representing a year-over-year change of +10.7%. EPS of $3.97 for the same period compares with $3.18 a year ago.
For the current quarter, Agco is expected to post earnings of $4.07 per share, indicating a change of -9% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.3% over the last 30 days.
Agco 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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CNH (CNHI) Up 6.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for CNH Industrial (CNHI - Free Report) . Shares have added about 6.9% 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 its most recent earnings report in order to get a better handle on the important catalysts.
CNH Industrial Q3 Earnings In-Line With Estimates
CNH Industrial delivered third-quarter 2023 adjusted earnings per share of 42 cents, which increased from 41 cents in the prior-year quarter and matched the Zacks Consensus Estimate.
In the third quarter, consolidated revenues rose 2% from the year-ago level to $5,986 million. The company’s net sales from industrial activities came in at $5,332 million, down 1% due to lower industry demand in Agriculture. The metric also lagged the Zacks Consensus Estimate of $5,767 million.
Segmental Performance
In the third quarter, net sales in the Agriculture segment fell 2.6% year over year to $4,384 million due to lower industry volume. The metric also missed our estimate of $4,751 million. The segment’s adjusted EBIT came in at $672 million, rising 0.1% year over year but missing our estimate of $732 million. The adjusted EBIT margin increased to 15.3% from 14.8%, led by a better mix, a higher gross margin and a slight reduction in SG&A expenses.
The Construction segment’s sales grew 6% year over year to $948 million in the quarter, led by favorable price realization and improved volume and mix in North America. However, the metric lagged our estimate of $968.1 million. Adjusted EBIT came in at $60 million, gaining 150% on favorable mix and a positive price realization. The figure missed our estimate of $66 million. The adjusted EBIT margin increased to 6.3% from 2.7%.
The Financial Services segment’s revenues went up 35% to $653 million, topping our estimate of $567.9 million on improved volumes and better base rates across all regions. Net income from the segment remained flat at $86 million.
Financial Details
CNH Industrial had cash and cash equivalents of $2,979 million as of Sep 30, 2023, down from $4,376 million as of Dec 31, 2022.
The company’s debt totaled $24,958 million as of Sep 30, 2023, up from $22,962 million as of Dec 31, 2022.
The company’s net cash used by operating activities was $608 million, down from $886 million in the year-ago period.
Free cash flow absorbed from industrial activities was $127 million in the quarter versus free cash flow of $202 million in the third quarter of 2022.
Updated Guidance 2023
For Industrial activities, sales are expected to increase in the band of 3-6% year over year, down from a prior estimate of 8-11%. The projections for free cash flow from industrial activities are in the range of $1-$1.2 billion, down from prior guidance of $1.3-$1.5 billion. R&D expenses and capex projections are pegged at $1.6 billion. SG&A expenses are expected to grow by no more than 5% vs 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -17.07% due to these changes.
VGM Scores
Currently, CNH has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, 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 D. 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. It's no surprise CNH has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
CNH belongs to the Zacks Manufacturing - Farm Equipment industry. Another stock from the same industry, Agco (AGCO - Free Report) , has gained 0.9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Agco reported revenues of $3.46 billion in the last reported quarter, representing a year-over-year change of +10.7%. EPS of $3.97 for the same period compares with $3.18 a year ago.
For the current quarter, Agco is expected to post earnings of $4.07 per share, indicating a change of -9% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.3% over the last 30 days.
Agco 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.