CNH Industrial N.V. (CNH) Stock Analysis
CNH Industrial N.V. (CNH) Stock Analysis
Overall Grade: F (Concerning)
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CNH Industrial N.V. faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | 22.3% | Above industry average |
| FCF Margin | 14.0% | Healthy cash flow |
Investment Thesis: Strong return on invested capital of 22.3% suggests durable competitive advantages and efficient capital allocation.
What is CNH Industrial N.V.'s Profitability and ROIC?
CNH Industrial N.V. generates strong returns on invested capital at 22.3%, indicating efficient capital allocation and competitive advantages. Gross margin of 31.5% with operating margin at 15.5% reflects the company's moderate market position.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 22.3% | Excellent | Strong capital efficiency |
| Gross Margin | 31.5% | Good | Competitive pricing environment |
| Operating Margin | 15.5% | Good | Efficient operations |
How Strong is CNH Industrial N.V.'s Cash Flow Quality?
CNH Industrial N.V. generated $2.5B in free cash flow over the trailing twelve months, representing a 14.0% margin. Cash earnings quality is strong, with operating cash flow exceeding net income by 5.0x.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 14.0% | Good | Healthy cash generation |
| Free Cash Flow (TTM) | $2.5B | Good | Positive cash generation |
| OCF/Net Income | 5.0x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is CNH Industrial N.V.'s Financial Health?
Is CNH Industrial N.V. Stock Overvalued or Undervalued?
CNH Industrial N.V. trades at a P/E of 23.1x, representing a premium to the sector median of N/A. Free cash flow yield of 22.1% offers attractive cash returns.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | 23.1x | Adequate | Premium valuation |
| EV/Sales | 0.5x | Excellent | Attractive revenue multiple |
| FCF Yield | 22.1% | Excellent | Attractive cash return |
| Dividend Yield | 2.7% | Adequate | Growth focus over income |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 22.3% | Top 10% | 2.8x above |
| Free Cash Flow Margin | 14.0% | Top 25% | 2.6x above |
| Gross Margin | 31.5% | Bottom 50% | 0.9x below |
| Operating Margin | 15.5% | Top 25% | 1.9x above |
| P/E Ratio | 23.1x | N/A | - |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: 22.3% (Excellent - Top 10% of sector (median: 8.0%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: 14.0% (Good - Top 25% of sector (median: 5.4%))
Gross Margin
Revenue minus cost of goods sold as a percentage. Higher gross margins indicate pricing power and competitive advantage.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 50% | Strong pricing power and competitive moat |
| Good | 30% - 50% | Healthy margins, differentiated product |
| Adequate | 20% - 30% | Moderate margins, competitive industry |
| Warning | 10% - 20% | Thin margins, commodity-like business |
| Red flag | < 10% | Very thin margins, structural challenges |
Current: 31.5% (Good - Bottom 50% of sector (median: 33.4%))
P/E Ratio (Price-to-Earnings)
Stock price divided by earnings per share. Lower P/E may indicate undervaluation, while higher P/E suggests growth expectations.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 15x | Attractively valued, potential opportunity |
| Good | 15x - 25x | Fair value for quality company |
| Adequate | 25x - 35x | Growth premium, justify with earnings growth |
| Warning | 35x - 50x | High expectations priced in |
| Red flag | > 50x or negative | Speculative valuation or losses |
Current: 23.1x (Adequate)
Free Cash Flow Yield
Free cash flow per share divided by stock price. Higher FCF yield indicates better cash return relative to valuation.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 8% | High cash return, potential value opportunity |
| Good | 5% - 8% | Solid cash yield |
| Adequate | 3% - 5% | Moderate cash return |
| Warning | 1% - 3% | Low cash yield, growth expectations |
| Red flag | < 1% | Minimal cash return to shareholders |
Current: 22.1% (Excellent)
Frequently Asked Questions
Q: What is CNH Industrial N.V.'s Return on Invested Capital (ROIC)?
CNH Industrial N.V. (CNH) has a trailing twelve-month Return on Invested Capital (ROIC) of 22.3%. This compares above the sector median of 8.0%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is CNH Industrial N.V.'s Free Cash Flow Margin?
CNH Industrial N.V. (CNH) has a free cash flow margin of 14.0%, generating $2.5 billion in free cash flow over the trailing twelve months. A FCF margin between 10-20% represents healthy cash generation for most industries.
Q: Is CNH Industrial N.V. stock overvalued or undervalued?
CNH Industrial N.V. (CNH) trades at a P/E ratio of 23.1x, which is above the sector median of N/A. The EV/Sales multiple is 0.5x. Free cash flow yield is 22.1%, which represents an attractive cash return to investors.
Q: Does CNH Industrial N.V. pay a dividend?
CNH Industrial N.V. (CNH) currently pays a dividend yield of 2.7%. Including share buybacks, the total shareholder yield is 2.7%. This yield is moderate, suggesting a balance between income and growth reinvestment.
Q: What is CNH Industrial N.V.'s revenue and earnings growth?
CNH Industrial N.V. (CNH) declined revenue by 8.8% year-over-year. Earnings per share decreased by 59.6% compared to the prior year. Revenue decline may indicate market challenges or industry headwinds.
Q: How does CNH Industrial N.V. compare to competitors in Industrials?
Compared to other companies in Industrials, CNH Industrial N.V. (CNH) shows: ROIC of 22.3% is above the sector median of 8.0% (Top 10%). FCF margin of 14.0% exceeds the sector median of 5.4% (Top 18% of sector). Gross margin at 31.5% is 1.8 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Industrials companies with available SEC filings.
Q: What warning signs should I watch for with CNH Industrial N.V.?
Investors in CNH Industrial N.V. (CNH) should monitor these potential warning signs: 1) ROIC has been declining, potentially signaling deteriorating competitive position. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-11-07. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.