Intrinsic value of CNH Industrial - CNHI

Previous Close

$14.86

  Intrinsic Value

$33.85

stock screener

  Rating & Target

str. buy

+128%

Previous close

$14.86

 
Intrinsic value

$33.85

 
Up/down potential

+128%

 
Rating

str. buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CNHI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -4.01
  15.30
  14.27
  13.34
  12.51
  11.76
  11.08
  10.47
  9.93
  9.43
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
Revenue, $m
  24,872
  28,677
  32,770
  37,142
  41,788
  46,702
  51,877
  57,311
  62,999
  68,943
  75,141
  81,597
  88,314
  95,299
  102,559
  110,103
  117,943
  126,091
  134,562
  143,370
  152,534
  162,070
  172,000
  182,345
  193,127
  204,370
  216,100
  228,343
  241,128
  254,484
  268,443
Variable operating expenses, $m
 
  9,828
  11,195
  12,656
  14,209
  15,850
  17,580
  19,395
  21,296
  23,282
  25,354
  27,266
  29,510
  31,844
  34,270
  36,791
  39,411
  42,134
  44,964
  47,908
  50,970
  54,156
  57,475
  60,931
  64,534
  68,291
  72,210
  76,302
  80,574
  85,037
  89,701
Fixed operating expenses, $m
 
  15,438
  15,823
  16,219
  16,625
  17,040
  17,466
  17,903
  18,350
  18,809
  19,279
  19,761
  20,255
  20,762
  21,281
  21,813
  22,358
  22,917
  23,490
  24,077
  24,679
  25,296
  25,929
  26,577
  27,241
  27,922
  28,620
  29,336
  30,069
  30,821
  31,591
Total operating expenses, $m
  23,256
  25,266
  27,018
  28,875
  30,834
  32,890
  35,046
  37,298
  39,646
  42,091
  44,633
  47,027
  49,765
  52,606
  55,551
  58,604
  61,769
  65,051
  68,454
  71,985
  75,649
  79,452
  83,404
  87,508
  91,775
  96,213
  100,830
  105,638
  110,643
  115,858
  121,292
Operating income, $m
  1,616
  3,412
  5,751
  8,267
  10,955
  13,811
  16,831
  20,012
  23,353
  26,851
  30,508
  34,569
  38,548
  42,692
  47,007
  51,499
  56,174
  61,040
  66,108
  71,385
  76,885
  82,618
  88,597
  94,837
  101,352
  108,157
  115,269
  122,705
  130,485
  138,626
  147,150
EBITDA, $m
  2,877
  4,798
  7,300
  9,990
  12,862
  15,914
  19,140
  22,537
  26,104
  29,839
  33,742
  37,816
  42,061
  46,484
  51,087
  55,879
  60,866
  66,057
  71,461
  77,089
  82,953
  89,065
  95,440
  102,091
  109,035
  116,287
  123,866
  131,789
  140,077
  148,750
  157,829
Interest expense (income), $m
  930
  910
  943
  1,159
  1,390
  1,635
  1,895
  2,168
  2,454
  2,755
  3,068
  3,395
  3,736
  4,090
  4,459
  4,842
  5,240
  5,654
  6,084
  6,531
  6,996
  7,479
  7,982
  8,506
  9,052
  9,621
  10,215
  10,834
  11,480
  12,154
  12,859
Earnings before tax, $m
  -9
  2,502
  4,808
  7,108
  9,565
  12,176
  14,936
  17,845
  20,898
  24,097
  27,440
  31,174
  34,812
  38,602
  42,548
  46,657
  50,934
  55,386
  60,024
  64,854
  69,889
  75,139
  80,615
  86,331
  92,299
  98,535
  105,054
  111,872
  119,005
  126,472
  134,291
Tax expense, $m
  298
  676
  1,298
  1,919
  2,583
  3,287
  4,033
  4,818
  5,643
  6,506
  7,409
  8,417
  9,399
  10,423
  11,488
  12,597
  13,752
  14,954
  16,206
  17,511
  18,870
  20,287
  21,766
  23,309
  24,921
  26,605
  28,365
  30,205
  32,131
  34,147
  36,259
Net income, $m
  -252
  1,827
  3,510
  5,189
  6,982
  8,888
  10,904
  13,027
  15,256
  17,591
  20,031
  22,757
  25,413
  28,179
  31,060
  34,059
  37,182
  40,432
  43,817
  47,344
  51,019
  54,851
  58,849
  63,021
  67,378
  71,931
  76,690
  81,666
  86,874
  92,324
  98,032

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  5,017
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  45,547
  46,706
  53,371
  60,492
  68,059
  76,061
  84,490
  93,340
  102,605
  112,284
  122,379
  132,893
  143,834
  155,209
  167,033
  179,321
  192,090
  205,361
  219,156
  233,502
  248,426
  263,958
  280,131
  296,979
  314,539
  332,850
  351,954
  371,894
  392,716
  414,469
  437,203
Adjusted assets (=assets-cash), $m
  40,530
  46,706
  53,371
  60,492
  68,059
  76,061
  84,490
  93,340
  102,605
  112,284
  122,379
  132,893
  143,834
  155,209
  167,033
  179,321
  192,090
  205,361
  219,156
  233,502
  248,426
  263,958
  280,131
  296,979
  314,539
  332,850
  351,954
  371,894
  392,716
  414,469
  437,203
Revenue / Adjusted assets
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
Average production assets, $m
  9,109
  10,496
  11,994
  13,594
  15,294
  17,093
  18,987
  20,976
  23,058
  25,233
  27,502
  29,864
  32,323
  34,879
  37,536
  40,298
  43,167
  46,149
  49,250
  52,474
  55,827
  59,318
  62,952
  66,738
  70,684
  74,799
  79,092
  83,573
  88,253
  93,141
  98,250
Working capital, $m
  0
  -5,793
  -6,619
  -7,503
  -8,441
  -9,434
  -10,479
  -11,577
  -12,726
  -13,926
  -15,178
  -16,483
  -17,839
  -19,250
  -20,717
  -22,241
  -23,825
  -25,470
  -27,181
  -28,961
  -30,812
  -32,738
  -34,744
  -36,834
  -39,012
  -41,283
  -43,652
  -46,125
  -48,708
  -51,406
  -54,225
Total debt, $m
  25,276
  26,208
  32,207
  38,616
  45,426
  52,628
  60,214
  68,179
  76,517
  85,229
  94,314
  103,777
  113,623
  123,861
  134,503
  145,562
  157,054
  168,997
  181,414
  194,325
  207,756
  221,735
  236,291
  251,454
  267,258
  283,738
  300,931
  318,877
  337,617
  357,195
  377,655
Total liabilities, $m
  41,103
  42,035
  48,034
  54,443
  61,253
  68,455
  76,041
  84,006
  92,344
  101,056
  110,141
  119,604
  129,450
  139,688
  150,330
  161,389
  172,881
  184,824
  197,241
  210,152
  223,583
  237,562
  252,118
  267,281
  283,085
  299,565
  316,758
  334,704
  353,444
  373,022
  393,482
Total equity, $m
  4,444
  4,671
  5,337
  6,049
  6,806
  7,606
  8,449
  9,334
  10,260
  11,228
  12,238
  13,289
  14,383
  15,521
  16,703
  17,932
  19,209
  20,536
  21,916
  23,350
  24,843
  26,396
  28,013
  29,698
  31,454
  33,285
  35,195
  37,189
  39,272
  41,447
  43,720
Total liabilities and equity, $m
  45,547
  46,706
  53,371
  60,492
  68,059
  76,061
  84,490
  93,340
  102,604
  112,284
  122,379
  132,893
  143,833
  155,209
  167,033
  179,321
  192,090
  205,360
  219,157
  233,502
  248,426
  263,958
  280,131
  296,979
  314,539
  332,850
  351,953
  371,893
  392,716
  414,469
  437,202
Debt-to-equity ratio
  5.688
  5.610
  6.030
  6.380
  6.670
  6.920
  7.130
  7.300
  7.460
  7.590
  7.710
  7.810
  7.900
  7.980
  8.050
  8.120
  8.180
  8.230
  8.280
  8.320
  8.360
  8.400
  8.440
  8.470
  8.500
  8.520
  8.550
  8.570
  8.600
  8.620
  8.640
Adjusted equity ratio
  -0.014
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -252
  1,827
  3,510
  5,189
  6,982
  8,888
  10,904
  13,027
  15,256
  17,591
  20,031
  22,757
  25,413
  28,179
  31,060
  34,059
  37,182
  40,432
  43,817
  47,344
  51,019
  54,851
  58,849
  63,021
  67,378
  71,931
  76,690
  81,666
  86,874
  92,324
  98,032
Depreciation, amort., depletion, $m
  1,261
  1,386
  1,549
  1,723
  1,907
  2,103
  2,309
  2,525
  2,751
  2,988
  3,234
  3,246
  3,513
  3,791
  4,080
  4,380
  4,692
  5,016
  5,353
  5,704
  6,068
  6,448
  6,843
  7,254
  7,683
  8,130
  8,597
  9,084
  9,593
  10,124
  10,679
Funds from operations, $m
  2,875
  3,213
  5,058
  6,911
  8,890
  10,991
  13,212
  15,551
  18,007
  20,578
  23,265
  26,003
  28,926
  31,971
  35,140
  38,440
  41,874
  45,448
  49,170
  53,047
  57,087
  61,299
  65,691
  70,275
  75,062
  80,061
  85,287
  90,751
  96,466
  102,449
  108,712
Change in working capital, $m
  767
  -769
  -827
  -883
  -938
  -993
  -1,045
  -1,098
  -1,149
  -1,201
  -1,252
  -1,304
  -1,357
  -1,411
  -1,467
  -1,524
  -1,584
  -1,646
  -1,711
  -1,779
  -1,851
  -1,926
  -2,006
  -2,090
  -2,178
  -2,271
  -2,369
  -2,473
  -2,583
  -2,698
  -2,820
Cash from operations, $m
  2,108
  3,981
  5,885
  7,794
  9,828
  11,984
  14,258
  16,649
  19,156
  21,779
  24,517
  27,307
  30,283
  33,382
  36,607
  39,964
  43,457
  47,094
  50,881
  54,827
  58,938
  63,225
  67,697
  72,365
  77,240
  82,332
  87,656
  93,224
  99,049
  105,146
  111,531
Maintenance CAPEX, $m
  0
  -990
  -1,141
  -1,304
  -1,478
  -1,662
  -1,858
  -2,064
  -2,280
  -2,506
  -2,743
  -2,989
  -3,246
  -3,513
  -3,791
  -4,080
  -4,380
  -4,692
  -5,016
  -5,353
  -5,704
  -6,068
  -6,448
  -6,843
  -7,254
  -7,683
  -8,130
  -8,597
  -9,084
  -9,593
  -10,124
New CAPEX, $m
  -2,134
  -1,387
  -1,498
  -1,600
  -1,700
  -1,798
  -1,894
  -1,989
  -2,082
  -2,175
  -2,269
  -2,363
  -2,459
  -2,556
  -2,657
  -2,761
  -2,869
  -2,982
  -3,100
  -3,224
  -3,354
  -3,490
  -3,634
  -3,786
  -3,946
  -4,115
  -4,293
  -4,481
  -4,679
  -4,888
  -5,109
Cash from investing activities, $m
  -921
  -2,377
  -2,639
  -2,904
  -3,178
  -3,460
  -3,752
  -4,053
  -4,362
  -4,681
  -5,012
  -5,352
  -5,705
  -6,069
  -6,448
  -6,841
  -7,249
  -7,674
  -8,116
  -8,577
  -9,058
  -9,558
  -10,082
  -10,629
  -11,200
  -11,798
  -12,423
  -13,078
  -13,763
  -14,481
  -15,233
Free cash flow, $m
  1,187
  1,604
  3,246
  4,890
  6,650
  8,523
  10,506
  12,597
  14,794
  17,097
  19,506
  21,955
  24,578
  27,312
  30,159
  33,122
  36,208
  39,420
  42,765
  46,250
  49,881
  53,667
  57,615
  61,736
  66,039
  70,534
  75,233
  80,146
  85,286
  90,665
  96,299
Issuance/(repayment) of debt, $m
  -1,141
  932
  5,998
  6,409
  6,810
  7,202
  7,586
  7,964
  8,339
  8,712
  9,085
  9,463
  9,846
  10,238
  10,642
  11,059
  11,492
  11,944
  12,416
  12,911
  13,432
  13,979
  14,555
  15,163
  15,804
  16,480
  17,193
  17,946
  18,740
  19,577
  20,461
Issuance/(repurchase) of shares, $m
  0
  3,417
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,331
  4,349
  5,998
  6,409
  6,810
  7,202
  7,586
  7,964
  8,339
  8,712
  9,085
  9,463
  9,846
  10,238
  10,642
  11,059
  11,492
  11,944
  12,416
  12,911
  13,432
  13,979
  14,555
  15,163
  15,804
  16,480
  17,193
  17,946
  18,740
  19,577
  20,461
Total cash flow (excl. dividends), $m
  -160
  5,953
  9,245
  11,299
  13,460
  15,725
  18,092
  20,561
  23,133
  25,809
  28,591
  31,418
  34,425
  37,550
  40,800
  44,181
  47,700
  51,364
  55,181
  59,161
  63,312
  67,645
  72,171
  76,899
  81,843
  87,014
  92,426
  98,092
  104,026
  110,243
  116,759
Retained Cash Flow (-), $m
  358
  -5,244
  -666
  -712
  -757
  -800
  -843
  -885
  -927
  -968
  -1,009
  -1,051
  -1,094
  -1,138
  -1,182
  -1,229
  -1,277
  -1,327
  -1,380
  -1,435
  -1,492
  -1,553
  -1,617
  -1,685
  -1,756
  -1,831
  -1,910
  -1,994
  -2,082
  -2,175
  -2,273
Prev. year cash balance distribution, $m
 
  5,017
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  5,726
  8,578
  10,587
  12,704
  14,925
  17,249
  19,676
  22,206
  24,841
  27,582
  30,366
  33,331
  36,413
  39,618
  42,952
  46,423
  50,037
  53,802
  57,726
  61,820
  66,092
  70,554
  75,215
  80,087
  85,183
  90,516
  96,098
  101,943
  108,068
  114,486
Discount rate, %
 
  11.10
  11.66
  12.24
  12.85
  13.49
  14.17
  14.88
  15.62
  16.40
  17.22
  18.08
  18.98
  19.93
  20.93
  21.98
  23.08
  24.23
  25.44
  26.71
  28.05
  29.45
  30.92
  32.47
  34.09
  35.80
  37.59
  39.47
  41.44
  43.51
  45.69
PV of cash for distribution, $m
 
  5,154
  6,881
  7,488
  7,833
  7,926
  7,790
  7,453
  6,954
  6,333
  5,631
  4,880
  4,139
  3,428
  2,769
  2,182
  1,675
  1,252
  910
  642
  440
  292
  188
  117
  70
  41
  23
  12
  6
  3
  1
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

CNH Industrial N.V. is a capital goods company. The Company is engaged in the design, production, marketing, sale and financing of agricultural and construction equipment, trucks, commercial vehicles, buses and specialty vehicles for firefighting, defense and other uses, as well as engines, transmissions and axles for vehicles and engines under marine and power generation applications. Its segments include Agricultural Equipment, which designs, manufactures and distributes farm machinery and implements; Construction Equipment, which designs, manufactures and distributes construction equipment; Commercial Vehicles, which designs, produces and sells a range of light, medium and heavy vehicles for the transportation and distribution of goods; Powertrain, which designs, manufactures and offers a range of propulsion and transmission systems, and axles for on- and off-road applications, and Financial Services, which offers a range of financial services to dealers and customers.

FINANCIAL RATIOS  of  CNH Industrial (CNHI)

Valuation Ratios
P/E Ratio -80.3
Price to Sales 0.8
Price to Book 4.6
Price to Tangible Book
Price to Cash Flow 9.6
Price to Free Cash Flow -778.2
Growth Rates
Sales Growth Rate -4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -14.9%
Cap. Spend. - 3 Yr. Gr. Rate -4.4%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 568.8%
Total Debt to Equity 568.8%
Interest Coverage 1
Management Effectiveness
Return On Assets 68.2%
Ret/ On Assets - 3 Yr. Avg. 23.9%
Return On Total Capital -0.8%
Ret/ On T. Cap. - 3 Yr. Avg. 0.7%
Return On Equity -5.5%
Return On Equity - 3 Yr. Avg. 4.7%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 21.4%
Gross Margin - 3 Yr. Avg. 21.5%
EBITDA Margin 8.8%
EBITDA Margin - 3 Yr. Avg. 9.6%
Operating Margin 6.5%
Oper. Margin - 3 Yr. Avg. 8%
Pre-Tax Margin -0%
Pre-Tax Margin - 3 Yr. Avg. 1.8%
Net Profit Margin -1%
Net Profit Margin - 3 Yr. Avg. 0.7%
Effective Tax Rate -3311.1%
Eff/ Tax Rate - 3 Yr. Avg. -1068.2%
Payout Ratio -82.1%

CNHI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CNHI stock intrinsic value calculation we used $24872 million for the last fiscal year's total revenue generated by CNH Industrial. The default revenue input number comes from 2016 income statement of CNH Industrial. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CNHI stock valuation model: a) initial revenue growth rate of 15.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 11.1%, whose default value for CNHI is calculated based on our internal credit rating of CNH Industrial, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of CNH Industrial.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CNHI stock the variable cost ratio is equal to 34.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $15061 million in the base year in the intrinsic value calculation for CNHI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.6% for CNH Industrial.

Corporate tax rate of 27% is the nominal tax rate for CNH Industrial. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CNHI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for CNHI are equal to 36.6%.

Life of production assets of 9.2 years is the average useful life of capital assets used in CNH Industrial operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CNHI is equal to -20.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4444 million for CNH Industrial - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1366.42 million for CNH Industrial is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of CNH Industrial at the current share price and the inputted number of shares is $20.3 billion.

RELATED COMPANIES Price Int.Val. Rating
CAT Caterpillar 168.83 289.16  str.buy
CMI Cummins 183.72 283.28  str.buy
DE Deere 167.90 515.58  str.buy
PCAR Paccar 76.40 293.04  str.buy
AGCO AGCO 73.59 70.92  hold

COMPANY NEWS

▶ CNH Industrial announces senior appointment   [Dec-15-17 10:00AM  PR Newswire]
▶ Why CNH Industrial NV (CNHI) Could Be A Buy   [Dec-04-17 08:00AM  Simply Wall St.]
▶ Top 10 Truck Manufacturing Companies in the World   [Nov-03-17 09:45AM  Insider Monkey]
▶ CNH tops Street 3Q forecasts   [08:45AM  Associated Press]
▶ CNH Industrial NV to Host Earnings Call   [07:35AM  ACCESSWIRE]
▶ Bank Of America Advises Selling AGCO Shares   [Oct-13-17 12:09PM  Benzinga]
▶ David Herro's 3rd Quarter 2017 Global Fund Commentary   [Oct-06-17 07:27PM  GuruFocus.com]
▶ ETFs with exposure to CNH Industrial NV : October 3, 2017   [Oct-03-17 11:05AM  Capital Cube]
▶ CNH Industrial: periodic report on the buy-back program   [Aug-30-17 04:40PM  PR Newswire]
▶ ETFs with exposure to CNH Industrial NV : August 1, 2017   [Aug-01-17 04:26PM  Capital Cube]
▶ CNH tops Street 2Q forecasts   [Jul-26-17 09:56PM  Associated Press]
▶ 4 Auto Stocks On Track to Beat in Q2   [Jul-21-17 01:08PM  Zacks]
▶ ETFs with exposure to CNH Industrial NV : July 3, 2017   [Jul-03-17 03:02PM  Capital Cube]
▶ CNH Industrial announces senior appointment   [Jun-30-17 10:05AM  PR Newswire]
▶ ETFs with exposure to CNH Industrial NV : June 22, 2017   [Jun-22-17 03:32PM  Capital Cube]
Financial statements of CNHI
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