CNH Industrial (CNHI) & AGCO (AGCO) Financial Comparison

CNH Industrial (NYSE: CNHI) and AGCO (NYSE:AGCO) are both mid-cap auto/tires/trucks companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, institutional ownership, valuation, dividends, risk, analyst recommendations and earnings.

Profitability

This table compares CNH Industrial and AGCO’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CNH Industrial 1.66% 14.63% 1.41%
AGCO 2.59% 7.50% 2.90%

Institutional & Insider Ownership

18.2% of CNH Industrial shares are held by institutional investors. Comparatively, 82.9% of AGCO shares are held by institutional investors. 16.6% of AGCO shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for CNH Industrial and AGCO, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CNH Industrial 0 2 6 0 2.75
AGCO 2 9 4 0 2.13

CNH Industrial presently has a consensus target price of $14.23, suggesting a potential downside of 0.26%. AGCO has a consensus target price of $71.57, suggesting a potential downside of 2.05%. Given CNH Industrial’s stronger consensus rating and higher possible upside, analysts clearly believe CNH Industrial is more favorable than AGCO.

Dividends

CNH Industrial pays an annual dividend of $0.12 per share and has a dividend yield of 0.8%. AGCO pays an annual dividend of $0.56 per share and has a dividend yield of 0.8%. CNH Industrial pays out 37.5% of its earnings in the form of a dividend. AGCO pays out 22.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. CNH Industrial has raised its dividend for 4 consecutive years. CNH Industrial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares CNH Industrial and AGCO’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CNH Industrial $24.87 billion 0.78 -$252.00 million $0.32 44.60
AGCO $7.41 billion 0.78 $160.10 million $2.54 28.77

AGCO has lower revenue, but higher earnings than CNH Industrial. AGCO is trading at a lower price-to-earnings ratio than CNH Industrial, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

CNH Industrial has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500. Comparatively, AGCO has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500.

Summary

CNH Industrial beats AGCO on 9 of the 17 factors compared between the two stocks.

About CNH Industrial

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.

About AGCO

AGCO Corporation is a manufacturer and distributor of agricultural equipment and related replacement parts. The Company sells a range of agricultural equipment, including tractors, combines, self-propelled sprayers, hay tools, forage equipment, seeding and tillage equipment, implements, and grain storage and protein production systems. The Company’s segments are North America, South America, Europe/Middle East, and Asia/Pacific/Africa. The Company’s products are marketed under various brands, including Challenger, Fendt, GSI, Massey Ferguson and Valtra. As of December 31, 2016, the Company distributed its products through over 3,000 independent dealers and distributors in more than 150 countries. In addition, the Company also provides retail and wholesale financing through its finance joint ventures with Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank). The Company’s AGCO Power engines division produces diesel engines, gears and generating sets.

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