Why Is CNH (CNH) Up 11.4% Since Last Earnings Report?

It has been about a month since the last earnings report for CNH Industrial (CNH). Shares have added about 11.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is CNH due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

CNH Q2 Earnings Beat Estimates

CNH Industrial reported second-quarter 2026 adjusted earnings of 13 cents per share, down 23.5% year over year but above the Zacks Consensus Estimate of 11 cents by 18.2%. Positive pricing and cost-saving actions partly offset lower industry demand and tariff pressure.

Consolidated revenues rose 2% year over year to $4.80 billion and beat the consensus estimate by 0.8%. Net sales of Industrial Activities increased 3% to $4.14 billion, with Construction growth helping offset a still-weak agricultural equipment cycle.

Agriculture Margins Narrow on Tariffs

Agriculture net sales increased 0.9% year over year to $3.28 billion. Favorable price realization supported the top line, while lower volumes remained a drag. North America sales rose 9.9%, EMEA gained 0.8% and Asia Pacific advanced 11.3%, while South America declined 27.0%.

Adjusted EBIT fell to $170 million from $263 million, with the margin contracting to 5.2% from 8.1%. Lower South America volumes, unfavorable mix in North America and EMEA, tariffs, higher SG&A and R&D expenses, and weaker joint venture results weighed on profitability. Favorable pricing provided a partial offset. Adjusted gross margin declined to 19.7% from 21.8%.

Construction Sales Advance 12%

Construction net sales climbed 12.0% year over year to $866 million, led by higher shipment volumes in North America. The quarter also included machines whose shipments were delayed in the first quarter because of a supplier quality issue. North America sales increased 23.5%.

Profitability did not keep pace with sales. Adjusted EBIT declined to $15 million from $35 million, while the margin fell to 1.7% from 4.5%. Tariffs and higher R&D expenses were the main pressures, partially offset by higher volumes and lower SG&A expenses. Adjusted gross margin declined to 11.9% from 15.7%.

CNH Financial Services Faces Brazil Credit Pressure

Financial Services revenues decreased 4.2% year over year to $656 million. Lower volumes in South America and North America, fewer used-equipment sales tied to operating lease maturities and lower yields in most regions pressured revenues, partly offset by favorable currency translation.

Segment net income fell 18.4% to $71 million. Retail loan originations were $2.53 billion, down $209 million, while the managed portfolio ended at $28.0 billion, down $0.7 billion. Receivables more than 30 days past due rose to 4.4% from 3.9%, mainly reflecting economic pressure on farmers in South America.

Cash Flow Falls on Working Capital

Net cash provided by operating activities was $145 million in the quarter, down from $772 million a year earlier. Industrial Activities generated $150 million of free cash flow versus $451 million, with management attributing the decline to lower EBIT and higher working capital investment.

Cash and cash equivalents totaled $1.87 billion at June 30, down from $2.58 billion at year-end 2025, while total debt declined to $25.97 billion from $26.76 billion. During the quarter, CNH paid $126 million in annual dividends and repurchased $36 million of shares at an average price of about $10.31.

CNH Raises 2026 Industrial Outlook

CNH now expects 2026 Industrial Activities net sales to be flat to up 2% year over year and adjusted EBIT margin of 3.2% to 3.8%. Agriculture net sales are projected to be about flat with a 5.0% to 5.5% adjusted EBIT margin. Construction net sales are expected to rise 5% to 10%, with margin of 1.8% to 2.3%.

The outlook reflects lower Section 232 tariff rates. CNH now estimates the 2026 tariff cost impact at about 170 basis points for Agriculture and 470 basis points for Construction, though higher transportation costs and South American market challenges remain offsets.

Industrial free cash flow is forecast at $200 million to $400 million, while adjusted diluted earnings are projected at 41 cents to 46 cents per share. For the third quarter, management expects Agriculture sales and EBIT margin to be about flat year over year, while Construction sales should rise in the low-to-mid teens with a low-to-mid-single-digit EBIT margin.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -14.29% due to these changes.

VGM Scores

Currently, CNH has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CNH has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

CNH is part of the Zacks Manufacturing - Farm Equipment industry. Over the past month, Agco (AGCO), a stock from the same industry, has gained 14.1%. The company reported its results for the quarter ended June 2026 more than a month ago.

Agco reported revenues of $2.61 billion in the last reported quarter, representing a year-over-year change of -1%. EPS of $1.43 for the same period compares with $1.35 a year ago.

For the current quarter, Agco is expected to post earnings of $0.88 per share, indicating a change of -34.8% from the year-ago quarter. The Zacks Consensus Estimate has changed -30.4% over the last 30 days.

Agco has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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This article originally published on Zacks Investment Research (zacks.com).

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