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CNH (CNHI) Up 0.7% 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 0.7% in that time frame, underperforming 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 drivers.
CNH Industrial delivered fourth-quarter 2023 adjusted EPS of 42 cents, which increased from 36 cents reported in the prior-year quarter and beat the Zacks Consensus Estimate of 41 cents.
In the fourth quarter, consolidated revenues fell 2% from the year-ago level to $6.79 billion. The company’s net sales from industrial activities came in at $6.02 billion, down 5% due to lower industry demand in Agriculture. The metric lagged the Zacks Consensus Estimate of $6.35 billion.
Segmental Performance
In the fourth quarter, net sales in the Agriculture segment fell 8% year over year to $4.95 billion due to lower industry volume and unfavorable mix. The metric missed our estimate of $5.29 billion. The segment’s adjusted EBIT came in at $669 million, falling 4.6% year over year and missing our estimate of $725.5 million. The adjusted EBIT margin increased to 13.5% from 13.1%, led by a better mix, higher gross margin and a slight reduction in SG&A expenses.
The Construction segment’s sales grew 9% year over year to $1.07 billion in the quarter, led by favorable price realization and improved volume and mix in North America. However, the metric lagged our estimate of $1.1 billion. Adjusted EBIT came in at $62 million, gaining 82.5% on favorable price realization. The figure missed our estimate of $65.7 million. The adjusted EBIT margin increased to 5.8% from 3.5%.
The Financial Services segment’s revenues went up 33% to $768 million, surpassing our estimate of $681.9 million on improved volumes and better base rates across all regions. Net income from the segment rose to $113 million from $75 million reported in the year-ago quarter.
Financial Details
CNH Industrial had cash and cash equivalents of $4.32 billion as of Dec 31, 2023, down from $4.38 billion as of Dec 31, 2022.
The company’s debt totaled $27.3 billion as of Dec 31, 2023, up from $22.96 billion as of Dec 31, 2022.
The company’s net cash provided by operating activities was $1.52 billion, up from $1.44 billion in the year-ago period.
Free cash flow from industrial activities was $1.63 billion in the quarter compared with free cash flow of $2.05 billion in the fourth quarter of 2022.
CNHI approved an additional $500 million share buyback program, which will begin after the completion of the existing $1 billion share buyback program.
Guidance 2024
For full-year 2024, Agriculture sales are expected to decline 8-12% year over year. Adjusted EBIT margin for the Agriculture segment is expected in the band of 14-15%. For the Construction segment, sales are expected to decline 7-11% year over year. Adjusted EBIT margin for the Construction segment is expected in the range of 5-6%. The projections for free cash flow from industrial activities are in the range of $1.2-$1.4 billion. Adjusted diluted EPS is expected between $1.50 and $1.60.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -11.62% due to these changes.
VGM Scores
At this time, CNH has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
CNH is part of the Zacks Manufacturing - Farm Equipment industry. Over the past month, Agco (AGCO - Free Report) , a stock from the same industry, has gained 4.9%. The company reported its results for the quarter ended December 2023 more than a month ago.
Agco reported revenues of $3.8 billion in the last reported quarter, representing a year-over-year change of -2.5%. EPS of $3.78 for the same period compares with $4.47 a year ago.
Agco is expected to post earnings of $2.30 per share for the current quarter, representing a year-over-year change of -34.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -2.2%.
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 A.
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CNH (CNHI) Up 0.7% 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 0.7% in that time frame, underperforming 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 drivers.
CNH Industrial Q4 Earnings Beat Estimates, Rise Y/Y
CNH Industrial delivered fourth-quarter 2023 adjusted EPS of 42 cents, which increased from 36 cents reported in the prior-year quarter and beat the Zacks Consensus Estimate of 41 cents.
In the fourth quarter, consolidated revenues fell 2% from the year-ago level to $6.79 billion. The company’s net sales from industrial activities came in at $6.02 billion, down 5% due to lower industry demand in Agriculture. The metric lagged the Zacks Consensus Estimate of $6.35 billion.
Segmental Performance
In the fourth quarter, net sales in the Agriculture segment fell 8% year over year to $4.95 billion due to lower industry volume and unfavorable mix. The metric missed our estimate of $5.29 billion. The segment’s adjusted EBIT came in at $669 million, falling 4.6% year over year and missing our estimate of $725.5 million. The adjusted EBIT margin increased to 13.5% from 13.1%, led by a better mix, higher gross margin and a slight reduction in SG&A expenses.
The Construction segment’s sales grew 9% year over year to $1.07 billion in the quarter, led by favorable price realization and improved volume and mix in North America. However, the metric lagged our estimate of $1.1 billion. Adjusted EBIT came in at $62 million, gaining 82.5% on favorable price realization. The figure missed our estimate of $65.7 million. The adjusted EBIT margin increased to 5.8% from 3.5%.
The Financial Services segment’s revenues went up 33% to $768 million, surpassing our estimate of $681.9 million on improved volumes and better base rates across all regions. Net income from the segment rose to $113 million from $75 million reported in the year-ago quarter.
Financial Details
CNH Industrial had cash and cash equivalents of $4.32 billion as of Dec 31, 2023, down from $4.38 billion as of Dec 31, 2022.
The company’s debt totaled $27.3 billion as of Dec 31, 2023, up from $22.96 billion as of Dec 31, 2022.
The company’s net cash provided by operating activities was $1.52 billion, up from $1.44 billion in the year-ago period.
Free cash flow from industrial activities was $1.63 billion in the quarter compared with free cash flow of $2.05 billion in the fourth quarter of 2022.
CNHI approved an additional $500 million share buyback program, which will begin after the completion of the existing $1 billion share buyback program.
Guidance 2024
For full-year 2024, Agriculture sales are expected to decline 8-12% year over year. Adjusted EBIT margin for the Agriculture segment is expected in the band of 14-15%. For the Construction segment, sales are expected to decline 7-11% year over year. Adjusted EBIT margin for the Construction segment is expected in the range of 5-6%. The projections for free cash flow from industrial activities are in the range of $1.2-$1.4 billion. Adjusted diluted EPS is expected between $1.50 and $1.60.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -11.62% due to these changes.
VGM Scores
At this time, CNH has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
CNH is part of the Zacks Manufacturing - Farm Equipment industry. Over the past month, Agco (AGCO - Free Report) , a stock from the same industry, has gained 4.9%. The company reported its results for the quarter ended December 2023 more than a month ago.
Agco reported revenues of $3.8 billion in the last reported quarter, representing a year-over-year change of -2.5%. EPS of $3.78 for the same period compares with $4.47 a year ago.
Agco is expected to post earnings of $2.30 per share for the current quarter, representing a year-over-year change of -34.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -2.2%.
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 A.