Equipment maker CNH Global
I recently told you how cheap CNH was looking on the valuation front. The stock has shown an awesome run-up of almost 58% since then. And not surprisingly, it has reported superb third-quarter numbers. Let's revisit the company as a potential investment.
Solid all-round performance
What's working for all equipment makers is also working for CNH. Global demand for agricultural equipment has shot up on the back of strong crop prices and the resultant increase in planting and farming income. This is what helped drive up farm equipment giant Deere's
CNH's agricultural equipment sales grew by a solid 29%. With such equipment accounting for 77% of CNH's total sales in the third quarter, it's no surprise that the company's total revenues surged 30% from the year-ago quarter, to $4.6 billion.
CNH's other segment, construction equipment, did equally well as its new products and positive pricing strategies worked. Demand for construction equipment has been robust across most geographic regions. This played a big role in driving up Caterpillar's
Backed by such robust top-line growth, CNH's bottom line more than tripled from last year, to $274 million.
The right focus
CNH has been busy growing its business. It has been aggressively adding new products to its portfolio, some of which boosted CNH's last-quarter revenue. More new-product launches will come through next year.
What's noteworthy is that some of the new products are specially targeted at the Brazilian markets. Tractor plant upgrades in Brazil and capacity expansions in India are also under way. The company also recently joined hands with Semeato, a Brazilian agriculture machinery company, to widen its products reach in Latin America.
These moves clearly highlight CNH's focus in the emerging markets, a good move considering how more and more companies are eyeing these markets. Last month, peer Terex acquired a stake in Ritz do Brazil, a Brazil-based company that makes equipment for supporting power lines. AGCO
CNH sure does not want to be left out in the race to make it big in this fast-growing region.
The Foolish bottom line
I see a lot of promise in CNH, primarily because of the industry it is in and its great growth initiatives. This stock should be on your watchlist.
The easiest way to keep track of CNH's progress is by adding the stock to our free and personalized My Watchlist service. It will keep you updated not just on CNH, but on all your favorite companies.