Market capitalization is below a multiple of seven times earnings, half that of Deere & Company, itself valued at its ten-year lows, below the low reached during the pandemic.
True, CNH has neither the margins nor the profitability of Deere. But the manufacturer, 29%-owned by Exor and owner of the famous New Holland, Case and Steyr brands, among others, is not lacking in assets either.
It operates in an oligopolistic industry protected by substantial barriers to entry, particularly in terms of R&D and distribution networks, where prices quickly reflect inflation. As proof of this, prices for new equipment have fallen only twice in fifty years.
Last year, CNH was ahead of schedule in its 2022 business plan, with a good sales performance in all segments, a notable expansion in margins, and good profitability in the credit portfolio.
The Group - which, in terms of analysis, has to approach its business like a carmaker, with an industrial business on the one hand and a credit business on the other - took the opportunity to return $1.2 billion to its shareholders.
On the other hand, its forecasts for 2024 are very cautious. In a tight market, sales of new equipment could fall by between 8% and 12%. Earnings per share are expected to be between $1.40 and $1.50, compared with $1.8 in 2023.
This, of course, explains the apprehensions of investors, who fear that the sector as a whole will slow down after several years of euphoria. Deere's margins, for example, are well above their average of the previous two cycles; some would even say they are abnormally high.
Over and above a possible downturn in the cycle, the strong dollar is not doing CNH any favours either, since the manufacturer generates over a third of its sales in Europe, and a good quarter of those in Latin America and Asia.