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Here's Why You Should Retain CNH Industrial (CNHI) Stock Now
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CNH Industrial is likely to gain traction from its recent acquisitions of Augmenta, Hemisphere and Bennaman, which will help the company remain on par with the latest technological advancements and emission-control procedures. However, high leverage, both absolute and relative, remains a concern.
Let’s discuss the factors highlighting the reasons behind retaining the stock in your portfolio.
Growth Indicators
CNH Industrial’s state-of-the-art and productivity-boosting agricultural product portfolio is boosting prospects. The acquisition of Raven Industries has significantly augmented CNH Industrial’s precision agriculture segment capabilities. CNH Industrial's strong engineering expertise combined with Raven's technology to introduce best-in-class products and solutions is helping to deliver enhanced productivity and yields. Last year, the segment churned out its highest profits in more than a decade. Demand for the unit’s high-end products is expected to continue this year as well, boosting CNHI’s overall results. As a confidence in its cutting-edge products, CNHI remains committed to generating $1 billion in Precision AG sales this year.
CNH Industrial’s construction segment is getting a boost from the addition of Sampierana. The Sampierana acquisition has been pivotal in accelerating profitable growth in Europe. Its excavator portfolio and technological innovations are boosting demand for products and the Eurocomach platform provides a solid foundation for electrification. The segment’s revenues and profits soared 16% and 37%, respectively, in 2022. Encouragingly, the company expects the unit to deliver even better results in 2023.
The recent acquisitions of Augmenta and Hemisphere will help CNH Industrial’s technological innovations. A significant stake in Bennamann will strengthen its position in sustainability stewardship. The company is developing several products and technologies across all segments to remain on par with the latest technological advancements and emission-control procedures. Upgraded product offerings will aid the company in achieving new business contracts. Favorable pricing and higher demand across agriculture and construction units will aid the company’s top line. Consequently, sales are expected to increase year over year in the band of 8-11% this year.
Initiatives like Strategic Sourcing and the CNHI Business System Program are expected to result in margin improvement starting this year. Minority stakes in Stout Industrial Technology and EarthOptics will position CNHI as a developer and provider of futuristic technology in the industry and help add value to the customer’s portfolio.
Concerns
CNH Industrial’s debt levels of $23.5 billion are huge compared with its cash and cash equivalents of $3.2 billion. The company’s debt totaled $23,552 million at the end of the first quarter of 2023, up from $22,962 million as of Dec 31, 2022. Its total debt-to-capital ratio stands at 0.77, higher than its industry's 0.43. The high leverage, in absolute and relative terms, restricts the firm’s financial flexibility to tap into growth opportunities.
Zacks Rank & Key Pick
CNH Industrial currently carries a Zacks Rank #3 (Hold).
AGCO is a leading manufacturer and distributor of agricultural equipment and related replacement parts. The Zacks Consensus Estimate for AGCO’s 2023 sales and earnings imply year-over-year growth of 14% and 14.9%, respectively.
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Here's Why You Should Retain CNH Industrial (CNHI) Stock Now
CNH Industrial is likely to gain traction from its recent acquisitions of Augmenta, Hemisphere and Bennaman, which will help the company remain on par with the latest technological advancements and emission-control procedures. However, high leverage, both absolute and relative, remains a concern.
Let’s discuss the factors highlighting the reasons behind retaining the stock in your portfolio.
Growth Indicators
CNH Industrial’s state-of-the-art and productivity-boosting agricultural product portfolio is boosting prospects. The acquisition of Raven Industries has significantly augmented CNH Industrial’s precision agriculture segment capabilities. CNH Industrial's strong engineering expertise combined with Raven's technology to introduce best-in-class products and solutions is helping to deliver enhanced productivity and yields. Last year, the segment churned out its highest profits in more than a decade. Demand for the unit’s high-end products is expected to continue this year as well, boosting CNHI’s overall results. As a confidence in its cutting-edge products, CNHI remains committed to generating $1 billion in Precision AG sales this year.
CNH Industrial’s construction segment is getting a boost from the addition of Sampierana. The Sampierana acquisition has been pivotal in accelerating profitable growth in Europe. Its excavator portfolio and technological innovations are boosting demand for products and the Eurocomach platform provides a solid foundation for electrification. The segment’s revenues and profits soared 16% and 37%, respectively, in 2022. Encouragingly, the company expects the unit to deliver even better results in 2023.
The recent acquisitions of Augmenta and Hemisphere will help CNH Industrial’s technological innovations. A significant stake in Bennamann will strengthen its position in sustainability stewardship. The company is developing several products and technologies across all segments to remain on par with the latest technological advancements and emission-control procedures. Upgraded product offerings will aid the company in achieving new business contracts. Favorable pricing and higher demand across agriculture and construction units will aid the company’s top line. Consequently, sales are expected to increase year over year in the band of 8-11% this year.
Initiatives like Strategic Sourcing and the CNHI Business System Program are expected to result in margin improvement starting this year. Minority stakes in Stout Industrial Technology and EarthOptics will position CNHI as a developer and provider of futuristic technology in the industry and help add value to the customer’s portfolio.
Concerns
CNH Industrial’s debt levels of $23.5 billion are huge compared with its cash and cash equivalents of $3.2 billion. The company’s debt totaled $23,552 million at the end of the first quarter of 2023, up from $22,962 million as of Dec 31, 2022. Its total debt-to-capital ratio stands at 0.77, higher than its industry's 0.43. The high leverage, in absolute and relative terms, restricts the firm’s financial flexibility to tap into growth opportunities.
Zacks Rank & Key Pick
CNH Industrial currently carries a Zacks Rank #3 (Hold).
A better-ranked player in the same industry is AGCO (AGCO - Free Report) , which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AGCO is a leading manufacturer and distributor of agricultural equipment and related replacement parts. The Zacks Consensus Estimate for AGCO’s 2023 sales and earnings imply year-over-year growth of 14% and 14.9%, respectively.