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CNH Industrial (CNH)
NYSE:CNH
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CNH Industrial
(NYSE:CNH)60Neutral
Positive Factors
Cost Management
CNH's proactive initiatives to manage costs and reduce channel inventory are seen as helping to offset ongoing challenging market conditions.
Precision Agriculture Strategy
There is increased confidence in CNH’s precision agriculture strategy, with notable progress in equipment product lines and integration.
Negative Factors
Agricultural Equipment Revenue
The company plans to underproduce retail in the fourth quarter by approximately 30-40%, which is expected to lower agricultural equipment revenue and margin.
Agriculture Sales Decline
Agriculture sales declined by 24.5% year over year, negatively impacting overall performance.
Earnings and Guidance
A negative initial stock reaction is expected due to CNH's 4Q24 miss and 2025 guidance.
CNH Industrial (CNH) vs. S&P 500 (SPY)
Market Cap
$14.98B
Dividend Yield3.7%
Average Volume (3M)18.59M
Price to Earnings (P/E)12.1
Beta (1Y)0.95
Revenue Growth-12.44%
EPS Growth-21.53%
CountryUS
Employees40,220
SectorIndustrials
Sector Strength66
IndustryIndustrial Machinery
Share Statistics
EPS (TTM)1.04
Shares Outstanding1,248,023,800
10 Day Avg. Volume22,851,929
30 Day Avg. Volume18,594,709
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.76
Price to Cash Flow (P/CF)2.20
P/FCF Ratio1.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$15.38Price Target Upside14.86% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering12
CNH Industrial Business Overview & Revenue Model
Company DescriptionCNH Industrial N.V. is a global leader in the capital goods sector, engaged in the design, production, and sale of agricultural and construction equipment, commercial vehicles, and powertrain solutions. Headquartered in the United Kingdom, CNH Industrial operates through various brands including Case IH, New Holland Agriculture, Case Construction Equipment, and FPT Industrial. The company serves a diverse clientele ranging from individual farmers and construction companies to large-scale industries, providing innovative and sustainable solutions tailored to meet the needs of different markets.
How the Company Makes MoneyCNH Industrial generates revenue through the sale of its machinery, vehicles, and powertrains across its main business segments: Agriculture, Construction, Commercial and Specialty Vehicles, and Powertrain. The Agriculture segment, which includes products like tractors and combines, is a significant contributor to its revenue. The Construction segment offers a range of construction equipment, while the Commercial and Specialty Vehicles segment provides buses, trucks, and firefighting vehicles. The Powertrain segment produces engines and transmissions for a variety of applications. Besides direct sales, CNH Industrial also earns through financing solutions provided to customers for purchasing equipment through its financial services arm. Additionally, the company benefits from strategic partnerships and joint ventures that enhance its market reach and technological advancement, further boosting its revenue streams.
CNH Industrial Financial Statement Overview
Summary
Overall, CNH Industrial exhibits solid operational performance with strong EBIT and EBITDA margins and effective equity utilization. However, there are concerns with a declining revenue trend and high leverage, which may pose financial risks. The improvement in free cash flow is a positive sign, but maintaining sustainable cash generation remains critical.Income Statement
CNH Industrial shows a strong recovery in key income metrics. The gross profit margin for the latest year is approximately 32.7%, reflecting efficient cost management. However, net profit margin decreased to 6.3% from 9.2% in the previous year, indicating potential challenges in converting revenue to profit. Revenue growth decreased by 19.7% compared to the previous year, highlighting a decline in sales. Despite this, EBIT and EBITDA margins remain robust at 19.4% and 18.5% respectively, showcasing operational efficiency.75
Positive
Balance Sheet
The balance sheet indicates a stable capital structure with a debt-to-equity ratio of 3.55, which is high and suggests potential leverage risk. However, return on equity is strong at 16.3%, showing effective use of equity to generate profits. The equity ratio is relatively low at 17.8%, indicating lower asset funding from shareholders.68
Positive
Cash Flow
CNH Industrial's cash flow demonstrates a challenging position. The free cash flow has improved to $782 million from a negative position in the prior year, showing better cash management. However, the operating cash flow to net income ratio is 1.58, indicating good conversion of income into cash, while the free cash flow to net income ratio is 0.63, reflecting modest free cash generation relative to net income.62
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 19.84B | 24.69B | 23.55B | 19.49B | 26.04B | Gross Profit |
| 6.49B | 7.85B | 6.97B | 5.40B | 4.56B | EBIT |
| 3.85B | 4.95B | 4.36B | 3.30B | 1.74B | EBITDA |
| 3.67B | 4.58B | 3.88B | 2.98B | 1.37B | Net Income Common Stockholders |
| 1.25B | 2.27B | 2.03B | 1.72B | -493.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 3.19B | 4.32B | 5.13B | 5.84B | 9.63B | Total Assets |
| 42.93B | 46.27B | 39.38B | 49.42B | 48.72B | Total Debt |
| 27.16B | 27.63B | 23.19B | 21.09B | 26.51B | Net Debt |
| 23.97B | 23.30B | 18.06B | 15.25B | 16.88B | Total Liabilities |
| 35.16B | 38.12B | 32.41B | 42.56B | 43.69B | Stockholders Equity |
| 7.65B | 8.03B | 6.93B | 6.78B | 4.91B |
| Cash Flow | Free Cash Flow | |||
| 782.00M | -288.00M | -442.00M | 3.16B | 3.68B | Operating Cash Flow |
| 1.97B | 907.00M | 557.00M | 4.08B | 5.53B | Investing Cash Flow |
| -2.77B | -3.70B | -3.01B | -5.00B | -2.75B | Financing Cash Flow |
| -67.00M | 2.60B | 1.96B | -1.45B | 659.00M |
CNH Industrial Technical Analysis
Positive
13.39
Price Trends
12.30
Positive
11.87
Positive
11.09
Positive
Market Momentum
0.05
Positive
60.37
Neutral
67.48
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CNH, the sentiment is Positive. The current price of 13.39 is above the 20-day moving average (MA) of 12.70, above the 50-day MA of 12.30, and above the 200-day MA of 11.09, indicating a bullish trend. The MACD of 0.05 indicates Positive momentum. The RSI at 60.37 is Neutral, neither overbought nor oversold. The STOCH value of 67.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CNH.
CNH Industrial Risk Analysis
CNH Industrial disclosed 38 risk factors in its most recent earnings report. CNH Industrial reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
CNH Industrial Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $2.59B | 7.88 | 19.13% | 1.68% | -0.47% | -34.74% | |
77 Outperform | $6.20B | 9.28 | 17.34% | 1.94% | 11.36% | 13.78% | |
74 Outperform | $124.41B | 20.32 | 27.91% | 1.29% | -20.93% | -34.33% | |
66 Neutral | $161.78B | 15.35 | 55.36% | 1.62% | -3.36% | 9.59% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
60 Neutral | $14.98B | 12.13 | 16.66% | 3.70% | -12.44% | -21.53% | |
53 Neutral | $6.83B | 46.40 | -10.11% | 1.27% | -19.08% | -136.41% |
* Industrials Sector Average
Performance Comparison
CNH
CNH Industrial
13.39
2.01
17.66%
AGCO
Agco
102.70
-6.17
-5.67%
CAT
Caterpillar
350.30
16.14
4.83%
DE
Deere
499.62
131.07
35.56%
OSK
Oshkosh
98.34
-13.97
-12.44%
TEX
Terex
40.97
-16.83
-29.12%
CNH Industrial Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: 6.61% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Negative
The earnings call reflected a challenging year for CNH, with significant revenue declines and high inventory levels. However, the company made notable progress in cost reductions and maintained resilience in certain segments such as Construction and Financial Services. Despite these achievements, the overall challenges and negative financial trends were significant.Highlights
Cost Reduction Achievements
CNH achieved a run-rate saving of about $600 million by the end of the year, with $375 million in COGS and $186 million in SG&A.
Positive Financial Services Performance
Financial Services net income for the full year was $379 million, an $8 million increase compared to 2023.
Construction Segment Resilience
Despite a 33% drop in net sales in the quarter, Construction gross margins were flat year-over-year, and improved on a full-year basis.
Free Cash Flow Improvement in Q4
Q4 free cash flow from industrial activities was $848 million as CNH depleted inventories in line with usual seasonality.
Lowlights
Significant Revenue Decline
Full year 2024 consolidated revenues were down 20% and Industrial net sales were down 23%.
Lower Production and Sales
Fourth quarter net sales of industrial activities were down 31% year-over-year to $4.1 billion.
Agriculture Segment Challenges
Agricultural net sales decreased 31% in the quarter with lower shipments across all regions.
Increased Warranty Costs
CNH incurred $52 million of higher warranty costs in Q4 and $146 million for the full year versus 2023.
High Inventory Levels
Dealer inventory is still more than about one month of sales above CNH's ambitious target levels.
Company Guidance
In the CNH Fourth Quarter Results Conference Call, the company provided guidance for 2025, focusing on inventory management, cost savings, and market expectations. CNH plans to reduce agricultural production hours by 15% to 20% in 2025, following a 34% reduction year-over-year. The company aims to lower dealer inventory levels, which were reduced by over $700 million in Q4 2024, and maintain pricing discipline. They achieved $600 million in run-rate savings by the end of 2024, contributing to an 8.2% Industrial adjusted EBIT margin, despite a 20% decline in consolidated revenues for the year. Looking ahead, CNH forecasts a 12% to 17% decrease in net sales for 2025, with an industrial-adjusted EBIT margin between 6% to 7%. Free cash flow for 2025 is projected to be between $200 million and $500 million, while EPS is expected to range from $0.65 to $0.75. The company is focused on achieving quality improvements and technology investments to position itself for future market recoveries.CNH Industrial Corporate Events
Business Operations and StrategyFinancial Disclosures
CNH Industrial Faces Revenue Decline Amid Market Challenges
Negative
Feb 4, 2025
CNH Industrial reported a significant decline in its fourth quarter and full-year 2024 revenues, with a 28% and 20% drop respectively, attributed to lower industry demand and dealer destocking. Despite these challenges, the company managed to maintain reasonable margin erosion through cost-saving initiatives and aims to continue aligning its business structure with market conditions, anticipating ongoing challenges in the first half of 2025.
Executive/Board Changes
CNH Industrial Revamps Executive Compensation Agreements
Neutral
Jan 14, 2025
On January 8, 2025, CNH Industrial’s Agriculture Chief Commercial Officer, Stefano Pampalone, entered into a new employment agreement. This agreement outlines his compensation, including a base salary of 564,270 Swiss Francs, a target bonus of 80% of his base salary, and eligibility for long-term incentive awards. The agreement also details severance packages based on the nature of employment termination, with specific provisions for changes in control. This move reflects CNH Industrial’s efforts to align executive compensation with company performance and market standards.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.