It has been about a month since the last earnings report for CNH Industrial (CNHI - Free Report) . Shares have added about 0.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.
CNH Industrial Q4 Earnings Beat Estimates, Gain Y/Y
CNH Industrial reported adjusted earnings of 21 cents per share in fourth-quarter 2018, increasing from 13 cents in the prior-year quarter. Moreover, the bottom line surpassed the Zacks Consensus Estimate of 15 cents.
Reportedly, adjusted net income rose to $294 million from $190 million recorded in fourth-quarter 2017.
Consolidated revenues declined 0.3% from the year-ago quarter to $8.2 billion. However, the figure surpassed the Zacks Consensus Estimate of $8.08 billion. The company’s net sales for Industrial Activities were $7.7 billion while adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $690 million.
In 2018, the company’s adjusted net income was $1.12 billion and adjusted earnings per share were 80 cents.
Consolidated revenues for the year went up 7.2% year over year to $29.71 billion.
Net revenues from the Agricultural Equipment segment rose 0.8% year over year to $3.2 billion. The rise was owing to favorable volume and positive net price realization in North America. Moreover, the segment’s adjusted EBIT was $258 million, marking a $16-million increase from the fourth quarter of 2017.
Construction Equipment segment’s revenues increased 7.1% from the prior-year quarter to $814 million. The gain was primarily due to favorable demand across all regions. Adjusted EBIT was $32 million, marking a $26-million increase from the prior-year quarter.
Revenues from Commercial Vehicles declined 3.5% from the prior-year quarter to $3.2 billion. Lower volume, primarily for heavy vehicle trucks in EMEA, led to this decline. The segment’s adjusted EBIT was $90 million, witnessing an increase of $27 million from third-quarter 2017.
The Powertrain segment’s revenues gained 2.7% year over year to $1.2 billion. The segment’s adjusted EBIT was $121 million, marking a $20-million increase from the second quarter of 2017.
Revenues from the Financial Services segment declined 3% year over year to $520 million. Adjusted EBIT was $109 million, marking a decline of $7 million from the prior-year quarter.
CNH Industrial had cash and cash equivalents of $5 billion as of Dec 31, 2018, compared with $5.4 billion as of Dec 31, 2017. The company’s debt was $24.4 billion as of Dec 31, 2018, recording a decline from $25.9 billion as of Dec 31, 2017.
At the end of 2018, CNH Industrial’s net cash inflow from operations was $2.6 billion compared with $2.9 billion recorded a year ago.
For 2019, the company projects net sales of approximately $28 billion for Industrial Activities. Adjusted earnings are expected to be 84-88 cents per share. Also, net industrial debt is anticipated between $0.4 billion and $0.2 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
At this time, CNH has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision 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.