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Why Is CNH (CNHI) Down 8.4% 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 lost about 8.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is CNH due for a breakout? 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 Earnings Beat Estimates in Q1, Rise Y/Y

CNH Industrial reported adjusted earnings per share of 18 cents in first-quarter 2019, which rose 29% from the year-ago quarter. Moreover, the bottom line surpassed the Zacks Consensus Estimate of 15 cents.

Reportedly, adjusted net income rose to $248 million from $204 million recorded in first-quarter 2018.

Consolidated revenues declined 4.7% from the year-ago quarter to $6.46 billion. The figure missed the Zacks Consensus Estimate of $6.62 billion. The company’s net sales for Industrial Activities were $6 billion while adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $525 million.

Segmental Performances

Net sales from the Agricultural Equipment segment declined 4% year over year to $2.5 billion. Moreover, the segment’s adjusted EBIT was $168 million, marking an $18-million decrease from the first quarter of 2018.

Construction Equipment segment’s sales declined 6.2% from the prior-year quarter to $640 million. The adjusted EBIT was $13 million.

Revenues from Commercial and Specialty vehicles dipped 3.2% from the prior-year quarter to $2.4 billion. The segment’s adjusted EBIT was $51 million, a slight increase from $49 million recorded in the prior-year quarter.

The Powertrain segment’s revenues declined 12.6% year over year to $1 billion. The segment’s adjusted EBIT was $96 million compared with $95 million in the first quarter of 2018.

Revenues from the Financial Services segment declined 5.6% year over year to $474 million. Adjusted EBIT was $131 million, marking a decline of $12 million from the prior-year quarter.

Financial Details

CNH Industrial had cash and cash equivalents of $3.7 billion as of Mar 31, 2019, compared with $5 billion as of Dec 31, 2018. The company’s debt was $23.8 billion as of Mar 31, 2019, compared with $24 billion as of Dec 31, 2018.

At the end of the first quarter of 2019, CNH Industrial’s net cash outflow from operations was $751 million compared with $74 million recorded a year ago.

Outlook

The company reiterated the projection for 2019. For the current year, it projects roughly $28 billion in Industrial Activities’ net sales and adjusted earnings per share are expected to be 84-88 cents.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, CNH has a subpar Growth Score of D, however its Momentum Score is doing a bit 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. Notably, CNH has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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