CNH Global NV (CNH) just hit a new multi-year high at $53.87 as grain prices continue to trade in elevated territory. With a strong earnings history over the last four quarters and a bullish growth projection, this Zacks #1 rank stock is harvesting momentum.
Company Description
CNH develops and manufactures agricultural and construction equipment worldwide. The company was founded in 1991 and has a market cap of $12 billion.
The agriculture story remains hot as inventories draw down and production is crimped by erratic weather. That and strong Q3 results from late October have shares of CNH trading near its multi-year high.
Third-Quarter Results
Revenue for the period was up 20% from last year to $3.5 billion. Earnings were also strong, coming in at 43 cents, 26% ahead of the Zacks Consensus Estimate, where the company has either beat or matched in each of the last four quarters.
Sales in its agricultural segment, comprising 78% of total revenue, were up 13%, which also lifted its operating margin to 8.5% from 6.5% last year. Construction equipment saw a big rebound, with sales up 52%, with operating profit jumping to $4 million from a loss of $88 million.
Geographic Diversity
CNH also has strong geographic diversity, with 44% of sales coming from North America, 19% came from Latin America, 19% from Western Europe and 18% came from “rest of world.”
Financial Profile
The company also continues to work on its balance sheet, with cash and equivalents up $374 million from last year to $1.2 billion. Its total debt fell $259 million to $15.9 billion.
Estimates
We saw some decent movement in estimates off the good quarter, with the current year adding 7 cents to $1.62 and the next-year estimate gaining 15 cents to $2.70, a bullish 66% growth projection.
But in spite of the big gains, CNH still has value, trading with a PEG (PE/Growth) ratio of just .28, well below the value benchmark of 1.
2-Year Chart
On the chart, CNH recently hit a new multi-year high at $53.87 after jumping higher with the market last fall and early in the year. Take a look at the recent high and big bounce off the bottom from 2009 below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
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