Ever wonder what became of agricultural equipment names like Case, Ford, International Harvester and New Holland? They are all part of the heritage of one of the biggest heavy equipment makers around.
CNH Global NV (NYSE: CNH) is a world class manufacturer of agricultural and construction equipment, ranking second to Deere (NYSE: DE) in the farm category and third to Caterpillar (NYSE: CAT) and Komatsu in the building line. Products include wide varieties of tractors, combine harvesters, seeding and planting equipment, sprayers, excavators, graders, bulldozers, backhoe loaders and skid steer loaders. A financial services unit assists clients with the purchase, or lease of equipment. The firm, a majority-owned subsidiary of Fiat S.p.A. (NYSE: FIA), is supported by about 11,500 dealers in 160 countries.
The company surprised the Street last week, when it reported Q1 EPS of 44 cents (ex-items) and revenues of $3.24 billion.
Analysts had been looking for 31 cents and $3.07 billion. Management also guided FY07 EPS to $2.15-$2.30, versus Street consensus of $2.09. The next day, the U.S. Army awarded CNH Global more than $160 million to build compact track loaders and skid steers. The news popped the shares out of an early April "cup" into the late April "handle" of a Cup & Handle formation. The price is now showing signs of completing the pattern with a bullish rise from the right-hand side of the "handle".
Brokers recommend the shares with two "buys", three "holds" and a "sell". Analysts see a 33 percent growth rate, through the next year. The CNH Price to Sales ratio (0.78), Price to Book ratio (1.99) and EPS Growth rate (120.00%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about four percent of the outstanding shares. Over the past 52 weeks, the stock has traded between $18.76 and $45.22. A stop-loss of $36.90 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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