CNH Global N.V. - Value

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There's been no slowdown in the agriculture sector. CNH Global N.V. ( CNH ) is expected to grow earnings by the double digits for the second year in a row. This Zacks #1 Rank (Strong Buy) still has attractive valuations, with a forward P/E of 10.1.

CNH Global manufactures agriculture and construction equipment for customers in 170 countries under the Case and New Holland brands. It is a majority owned subsidiary of Fiat.

2012 Zacks Consensus Estimate Rises

In just the last week, one estimate has been revised higher for the full year. This is a bullish signal ahead of the expected Apr 25 earnings report.

The 2012 Zacks Consensus has moved to $4.32 from $4.30 in that time.

That is 2012 earnings growth of 12.7%.

This is coming on the heels of 2011's strong earning growth of 83.2%.

Strong Earnings Surprise Track Record

On Jan 31, CNH Global reported its fourth quarter results and surprised on the Zacks Consensus Estimate for the 9th consecutive quarter.

Earnings per share were 78 cents compared to the consensus of 72 cents.

Net sales for the year jumped 25% to $18.1 billion as both the agriculture and construction segments saw strong results. The Agricultural equipment segment saw sales rise 23% to $14.2 billion while the Construction equipment segment saw sales climb 32% to $3.9 billion. Ag sales were up 24% in the fourth quarter.

North America continued to be its largest market with 42% of sales. EAME & CIS was 32%, Latin America was 16% and APAC was 10% of sales.

The agriculture equipment market has been strong in North America as farmers have been spending their record 2011 incomes.

Still a Value

Shares of CNH have rebounded in 2012 but haven't retaken the 2011 highs.

CNH still has attractive valuations.

In addition to a P/E of just 10.1, it has a price-to-sales ratio of 0.5. A P/S ratio under 1.0 usually means a company is undervalued.

The price-to-book ratio is also flashing "value". CNH has a P/B ratio of 1.3 which is well under the 3.0 cut off I use for value.

CNH has other solid fundamentals, including a 1-year return on equity (ROE) of 11.6%.

The agriculture stocks have been overlooked by many investors in 2012. We'll find out next week whether that's been a mistake.

Tracey Ryniec is the Value Stock Strategist for Zacks.com . She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec .


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks

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