Intrinsic value of CNH Industrial - CNHI

Previous Close

$13.05

  Intrinsic Value

$5.57

stock screener

  Rating & Target

str. sell

-57%

Previous close

$13.05

 
Intrinsic value

$5.57

 
Up/down potential

-57%

 
Rating

str. sell

*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

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 17.9

 

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
  2.90
  3.11
  3.30
  3.47
  3.62
  3.76
  3.88
  4.00
  4.10
  4.19
  4.27
  4.34
  4.41
  4.47
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
  4.89
  4.90
Revenue, $m
  24,872
  25,593
  26,389
  27,260
  28,205
  29,227
  30,326
  31,504
  32,763
  34,105
  35,532
  37,049
  38,657
  40,361
  42,163
  44,069
  46,082
  48,207
  50,448
  52,812
  55,302
  57,926
  60,689
  63,598
  66,660
  69,881
  73,270
  76,834
  80,582
  84,522
  88,665
Variable operating expenses, $m
 
  8,797
  9,063
  9,354
  9,670
  10,011
  10,378
  10,772
  11,193
  11,641
  12,118
  12,380
  12,917
  13,487
  14,089
  14,726
  15,398
  16,108
  16,857
  17,647
  18,479
  19,356
  20,280
  21,252
  22,275
  23,351
  24,483
  25,674
  26,927
  28,243
  29,628
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
  24,235
  24,886
  25,573
  26,295
  27,051
  27,844
  28,675
  29,543
  30,450
  31,397
  32,141
  33,172
  34,249
  35,370
  36,539
  37,756
  39,025
  40,347
  41,724
  43,158
  44,652
  46,209
  47,829
  49,516
  51,273
  53,103
  55,010
  56,996
  59,064
  61,219
Operating income, $m
  1,616
  1,359
  1,503
  1,687
  1,911
  2,176
  2,481
  2,829
  3,220
  3,654
  4,135
  4,908
  5,484
  6,112
  6,794
  7,530
  8,325
  9,181
  10,101
  11,087
  12,144
  13,274
  14,481
  15,770
  17,144
  18,608
  20,166
  21,824
  23,586
  25,458
  27,446
EBITDA, $m
  2,877
  2,622
  2,798
  3,016
  3,278
  3,583
  3,933
  4,327
  4,768
  5,256
  5,793
  6,381
  7,022
  7,718
  8,471
  9,284
  10,159
  11,099
  12,108
  13,188
  14,344
  15,578
  16,896
  18,300
  19,796
  21,388
  23,081
  24,881
  26,792
  28,821
  30,973
Interest expense (income), $m
  930
  910
  781
  823
  869
  919
  973
  1,030
  1,093
  1,159
  1,230
  1,305
  1,385
  1,470
  1,560
  1,655
  1,756
  1,862
  1,974
  2,092
  2,217
  2,348
  2,487
  2,633
  2,786
  2,948
  3,118
  3,297
  3,485
  3,682
  3,890
Earnings before tax, $m
  -9
  449
  722
  864
  1,042
  1,257
  1,509
  1,799
  2,127
  2,495
  2,905
  3,602
  4,099
  4,642
  5,233
  5,875
  6,570
  7,319
  8,127
  8,995
  9,927
  10,925
  11,994
  13,137
  14,358
  15,660
  17,048
  18,527
  20,101
  21,776
  23,555
Tax expense, $m
  298
  121
  195
  233
  281
  339
  407
  486
  574
  674
  784
  973
  1,107
  1,253
  1,413
  1,586
  1,774
  1,976
  2,194
  2,429
  2,680
  2,950
  3,238
  3,547
  3,877
  4,228
  4,603
  5,002
  5,427
  5,879
  6,360
Net income, $m
  -252
  328
  527
  631
  761
  918
  1,102
  1,313
  1,553
  1,822
  2,121
  2,630
  2,992
  3,389
  3,820
  4,289
  4,796
  5,343
  5,932
  6,566
  7,246
  7,975
  8,756
  9,590
  10,481
  11,432
  12,445
  13,525
  14,674
  15,896
  17,195

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
  41,683
  42,979
  44,397
  45,937
  47,601
  49,391
  51,309
  53,359
  55,545
  57,870
  60,340
  62,960
  65,734
  68,670
  71,774
  75,052
  78,512
  82,163
  86,012
  90,069
  94,342
  98,843
  103,580
  108,567
  113,813
  119,332
  125,137
  131,241
  137,659
  144,406
Adjusted assets (=assets-cash), $m
  40,530
  41,683
  42,979
  44,397
  45,937
  47,601
  49,391
  51,309
  53,359
  55,545
  57,870
  60,340
  62,960
  65,734
  68,670
  71,774
  75,052
  78,512
  82,163
  86,012
  90,069
  94,342
  98,843
  103,580
  108,567
  113,813
  119,332
  125,137
  131,241
  137,659
  144,406
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
  9,367
  9,658
  9,977
  10,323
  10,697
  11,099
  11,530
  11,991
  12,482
  13,005
  13,560
  14,149
  14,772
  15,432
  16,129
  16,866
  17,644
  18,464
  19,329
  20,241
  21,201
  22,212
  23,277
  24,398
  25,577
  26,817
  28,121
  29,493
  30,935
  32,451
Working capital, $m
  0
  -5,170
  -5,331
  -5,506
  -5,698
  -5,904
  -6,126
  -6,364
  -6,618
  -6,889
  -7,178
  -7,484
  -7,809
  -8,153
  -8,517
  -8,902
  -9,309
  -9,738
  -10,191
  -10,668
  -11,171
  -11,701
  -12,259
  -12,847
  -13,465
  -14,116
  -14,801
  -15,520
  -16,278
  -17,074
  -17,910
Total debt, $m
  25,276
  21,688
  22,854
  24,130
  25,517
  27,014
  28,625
  30,351
  32,197
  34,164
  36,256
  38,479
  40,837
  43,334
  45,976
  48,769
  51,720
  54,834
  58,120
  61,584
  65,235
  69,081
  73,131
  77,395
  81,883
  86,605
  91,572
  96,796
  102,290
  108,066
  114,138
Total liabilities, $m
  41,103
  37,515
  38,681
  39,957
  41,344
  42,841
  44,452
  46,178
  48,024
  49,991
  52,083
  54,306
  56,664
  59,161
  61,803
  64,596
  67,547
  70,661
  73,947
  77,411
  81,062
  84,908
  88,958
  93,222
  97,710
  102,432
  107,399
  112,623
  118,117
  123,893
  129,965
Total equity, $m
  4,444
  4,168
  4,298
  4,440
  4,594
  4,760
  4,939
  5,131
  5,336
  5,555
  5,787
  6,034
  6,296
  6,573
  6,867
  7,177
  7,505
  7,851
  8,216
  8,601
  9,007
  9,434
  9,884
  10,358
  10,857
  11,381
  11,933
  12,514
  13,124
  13,766
  14,441
Total liabilities and equity, $m
  45,547
  41,683
  42,979
  44,397
  45,938
  47,601
  49,391
  51,309
  53,360
  55,546
  57,870
  60,340
  62,960
  65,734
  68,670
  71,773
  75,052
  78,512
  82,163
  86,012
  90,069
  94,342
  98,842
  103,580
  108,567
  113,813
  119,332
  125,137
  131,241
  137,659
  144,406
Debt-to-equity ratio
  5.688
  5.200
  5.320
  5.440
  5.550
  5.680
  5.800
  5.920
  6.030
  6.150
  6.270
  6.380
  6.490
  6.590
  6.700
  6.790
  6.890
  6.980
  7.070
  7.160
  7.240
  7.320
  7.400
  7.470
  7.540
  7.610
  7.670
  7.740
  7.790
  7.850
  7.900
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
  328
  527
  631
  761
  918
  1,102
  1,313
  1,553
  1,822
  2,121
  2,630
  2,992
  3,389
  3,820
  4,289
  4,796
  5,343
  5,932
  6,566
  7,246
  7,975
  8,756
  9,590
  10,481
  11,432
  12,445
  13,525
  14,674
  15,896
  17,195
Depreciation, amort., depletion, $m
  1,261
  1,263
  1,295
  1,329
  1,367
  1,408
  1,451
  1,498
  1,548
  1,602
  1,658
  1,474
  1,538
  1,606
  1,677
  1,753
  1,833
  1,918
  2,007
  2,101
  2,200
  2,304
  2,414
  2,530
  2,652
  2,780
  2,915
  3,057
  3,206
  3,363
  3,527
Funds from operations, $m
  2,875
  1,591
  1,822
  1,960
  2,128
  2,325
  2,553
  2,811
  3,101
  3,423
  3,779
  4,104
  4,530
  4,994
  5,498
  6,042
  6,629
  7,261
  7,939
  8,667
  9,446
  10,280
  11,170
  12,120
  13,133
  14,212
  15,360
  16,582
  17,880
  19,259
  20,723
Change in working capital, $m
  767
  -146
  -161
  -176
  -191
  -206
  -222
  -238
  -254
  -271
  -288
  -306
  -325
  -344
  -364
  -385
  -407
  -429
  -453
  -477
  -503
  -530
  -558
  -588
  -618
  -651
  -685
  -720
  -757
  -796
  -837
Cash from operations, $m
  2,108
  1,736
  1,983
  2,136
  2,319
  2,532
  2,775
  3,049
  3,355
  3,694
  4,068
  4,410
  4,855
  5,339
  5,862
  6,427
  7,036
  7,690
  8,392
  9,145
  9,950
  10,810
  11,728
  12,708
  13,752
  14,863
  16,045
  17,302
  18,637
  20,055
  21,560
Maintenance CAPEX, $m
  0
  -990
  -1,018
  -1,050
  -1,084
  -1,122
  -1,163
  -1,206
  -1,253
  -1,303
  -1,357
  -1,414
  -1,474
  -1,538
  -1,606
  -1,677
  -1,753
  -1,833
  -1,918
  -2,007
  -2,101
  -2,200
  -2,304
  -2,414
  -2,530
  -2,652
  -2,780
  -2,915
  -3,057
  -3,206
  -3,363
New CAPEX, $m
  -2,134
  -259
  -291
  -319
  -346
  -374
  -402
  -431
  -461
  -491
  -523
  -555
  -589
  -624
  -660
  -697
  -737
  -778
  -820
  -865
  -912
  -960
  -1,011
  -1,065
  -1,121
  -1,179
  -1,240
  -1,304
  -1,372
  -1,442
  -1,516
Cash from investing activities, $m
  -921
  -1,249
  -1,309
  -1,369
  -1,430
  -1,496
  -1,565
  -1,637
  -1,714
  -1,794
  -1,880
  -1,969
  -2,063
  -2,162
  -2,266
  -2,374
  -2,490
  -2,611
  -2,738
  -2,872
  -3,013
  -3,160
  -3,315
  -3,479
  -3,651
  -3,831
  -4,020
  -4,219
  -4,429
  -4,648
  -4,879
Free cash flow, $m
  1,187
  488
  673
  768
  888
  1,036
  1,210
  1,412
  1,641
  1,900
  2,188
  2,441
  2,793
  3,177
  3,597
  4,052
  4,546
  5,079
  5,654
  6,273
  6,937
  7,650
  8,413
  9,229
  10,101
  11,032
  12,024
  13,082
  14,208
  15,407
  16,681
Issuance/(repayment) of debt, $m
  -1,141
  -3,588
  1,167
  1,276
  1,386
  1,498
  1,611
  1,727
  1,845
  1,967
  2,093
  2,223
  2,357
  2,497
  2,642
  2,793
  2,951
  3,114
  3,286
  3,464
  3,651
  3,846
  4,050
  4,264
  4,488
  4,722
  4,967
  5,224
  5,494
  5,776
  6,072
Issuance/(repurchase) of shares, $m
  0
  4,414
  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
  826
  1,167
  1,276
  1,386
  1,498
  1,611
  1,727
  1,845
  1,967
  2,093
  2,223
  2,357
  2,497
  2,642
  2,793
  2,951
  3,114
  3,286
  3,464
  3,651
  3,846
  4,050
  4,264
  4,488
  4,722
  4,967
  5,224
  5,494
  5,776
  6,072
Total cash flow (excl. dividends), $m
  -160
  1,313
  1,840
  2,044
  2,275
  2,533
  2,821
  3,138
  3,486
  3,867
  4,281
  4,664
  5,150
  5,674
  6,239
  6,845
  7,496
  8,194
  8,940
  9,737
  10,588
  11,496
  12,463
  13,493
  14,589
  15,754
  16,992
  18,306
  19,702
  21,183
  22,753
Retained Cash Flow (-), $m
  358
  -4,741
  -130
  -142
  -154
  -166
  -179
  -192
  -205
  -219
  -233
  -247
  -262
  -277
  -294
  -310
  -328
  -346
  -365
  -385
  -406
  -427
  -450
  -474
  -499
  -525
  -552
  -580
  -610
  -642
  -675
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
 
  1,589
  1,710
  1,902
  2,121
  2,367
  2,642
  2,946
  3,281
  3,648
  4,048
  4,417
  4,888
  5,397
  5,945
  6,535
  7,168
  7,848
  8,575
  9,352
  10,182
  11,068
  12,013
  13,019
  14,090
  15,229
  16,440
  17,726
  19,092
  20,541
  22,078
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
 
  1,430
  1,372
  1,345
  1,308
  1,257
  1,193
  1,116
  1,028
  930
  827
  710
  607
  508
  416
  332
  259
  196
  145
  104
  72
  49
  32
  20
  12
  7
  4
  2
  1
  1
  0
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 -70.5
Price to Sales 0.7
Price to Book 4
Price to Tangible Book
Price to Cash Flow 8.4
Price to Free Cash Flow -683.4
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 2.9% 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 1371.88 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 $17.9 billion.

RELATED COMPANIES Price Int.Val. Rating
CAT Caterpillar 143.77 72.31  sell
CMI Cummins 170.77 155.86  hold
DE Deere 151.33 155.05  buy
PCAR Paccar 71.74 76.80  hold
AGCO AGCO 72.49 62.24  hold

COMPANY NEWS

▶ 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]
▶ Deere Puts a $15 Billion Rival in the Headlights   [Jun-06-17 10:09AM  Bloomberg]
Financial statements of CNHI
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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