VOLAF - CNH Industrial: Why I Replaced It With A Better Option After Leadership Change

2024-05-14 17:56:10 ET

Summary

• From 2022 to 2023, CNH Industrial was my favorite pick in the industry that actually outperformed its peers.
• Starting late 2023, agriculture machinery manufacturers have experienced market weakness and other issues, changing the macro environment we need to use to assess the prospects for these companies.
• Putting together several pieces of the puzzle, I replaced CNH Industrial with a better option to keep riding the wave of agriculture equipment manufacturing.

CNH Industrial

CNH Indust rial ( CNHI ) r ecently reported earnings, beating its Q1 estimates . Yet, while CNH shares didn't drop, neither have they gained in price since the report. The expectations were rather low after the company had already been torpedoed by the market two quarters ago when it first reported YoY declines coupled with a grimmer-than-expected outlook.

Agriculture equipment demand peaked between 2022 and 2023 and has since seen steady demand softening. The reasons depend on several factors: higher interest rates, declining farm income due to lower commodity prices, and an uncertain outlook of the economy all rank among them....

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