It has been about a month since the last earnings report for CNH Industrial (CNH). Shares have lost about 4.5% 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 drivers.
CNH Industrial reported fourth-quarter 2024 adjusted earnings per share (EPS) of 15 cents, which declined from 42 cents in the prior-year quarter. The figure also missed the Zacks Consensus Estimate of 19 cents.
In the fourth quarter, consolidated revenues declined nearly 28% from the year-ago level to $4.88 billion and missed the consensus mark of $4.89 billion. The company’s net sales from industrial activities came in at $4.13 billion, down 31% due to lower shipment volumes.
In the fourth quarter, net sales in the Agriculture segment fell 31% year over year to $3.41 billion due to lower shipment volume. The metric also missed our estimate of $3.43 billion. The segment’s adjusted EBIT came in at $244 million, down 62% year over year due to lower volumes. The figure also missed our estimate of $307.2 million. The adjusted EBIT margin decreased to 7.2% from 12.8%.
The Construction segment’s sales declined 33% year over year to $718 million as a result of lower volume across all regions. The metric also missed our estimate of $756 million. Adjusted EBIT came in at $18 million, down 71% year over year due to lower volume and unfavorable net price realization. The figure marginally missed our estimate of $18.3 million. The adjusted EBIT margin decreased to 2.5% from 5.8%.
The Financial Services segment’s revenues fell 3% to $743 million due to lower equipment sales and the unfavorable impact of currency translation. However, the metric surpassed our estimate of $648.8 million. Net income from the segment fell to $92 million from $113 million reported in the year-ago quarter.
CNH Industrial had cash and cash equivalents of $3.19 billion as of Dec. 31, 2024, down from $4.32 billion as of Dec. 31, 2023.
The company’s debt totaled $26.88 billion as of Dec. 31, 2024, down from $27.33 billion as of Dec. 31, 2023.
The company’s net cash provided by operating activities was $1.69 billion compared with $1.51 billion reported in the year-ago period.
CNH reported a free cash flow from industrial activities of $848 million in the quarter compared with a free cash flow of $1.63 billion in the fourth quarter of 2023.
In 2025, Agriculture sales are expected to decrease 13-18% compared with a 23% decline in 2024. Adjusted EBIT margin for the Agriculture segment is expected in the band of 8.5-9.5% compared with 10.5% in 2024. For the Construction segment, sales are expected to decrease 5-10% year over year compared with a decline of 22% in 2024.
The company expects free cash flow from industrial activities in the range of $200-$500 million against the free cash outflow of $401 million in 2024. Adjusted EPS is expected between 65 cents and 75 cents compared with 99 cents in 2024.
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -15.9% due to these changes.
At this time, CNH has a poor Growth Score of F, a grade with the same score on the momentum front. However, 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.
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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This article originally published on Zacks Investment Research (zacks.com).
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