Let's talk about the popular CNH Industrial N.V. (NYSE:CNHI). The company's shares received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$15.85 at one point, and dropping to the lows of US$10.77. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether CNH Industrial's current trading price of US$11.00 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CNH Industrial’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for CNH Industrial
What's the opportunity in CNH Industrial?
According to my valuation model, CNH Industrial seems to be fairly priced at around 4.6% below my intrinsic value, which means if you buy CNH Industrial today, you’d be paying a fair price for it. And if you believe the company’s true value is $11.53, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because CNH Industrial’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from CNH Industrial?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. CNH Industrial's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in CNHI’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?