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Is CNH Industrial Mulling Over Divestment of Iveco Division?

Zacks Equity Research

CNH Industrial N.V. CNHI has been reportedly mulling over the spin-off of its Iveco Truck division for quite some time. Per Bloomberg, the truck business’ divestment from the company’s profitable tractor division has long been under consideration, ever since CEO Richard Tobin proposed the idea last year.

Notably, CNH Industrial’s shares rallied 7.6% during the last trading session, after Bloomberg disclosed the spin-off speculations.

However, no final decisions have been made yet. The company will likely reveal a review of the business at the investors meeting in New York, on Sep 3.

CNH Industrial’s agricultural business is its largest unit currently, the profit margins being more than triple of the truck operations. CNH Industrial’s farm-equipment business caters products under the brand names — New Holland, Case IH, the STEYR brand in Europe, and the Miller brand in North America. Case and New Holland were once part of carmaker Fiat Chrysler Automobiles NV.

The company’s Commercial Vehicles segment manufactures and distributes a full range of commercial vehicles under the IVECO brand, — including the Iveco Bus and Heuliez Bus brands. Moreover, fire-fighting and special-purpose vehicles are catered under the Magirus, Iveco Astra and Iveco Defense Vehicles brands.

CNH Industrial has been developing several products and technologies across all its segments, in a bid to remain at par with the latest technological advancements and emission-control procedures. It rolled out 24 products in the market during the first three months of 2019. A few of its many recent launches include Iveco’s daily minibus, the AFS Connect Magnum series tractors by Case IH, and the construction equipment segment’s methane-powered wheel-loader concept — Project TETRA. Notably, upgraded product offerings will aid the company in clinching more business contracts in the upcoming period as well.

Share Price Performance

Over the past year, CNH Industrial’s shares have lost 15.9% compared with the industry’s loss of 16.4%.

Zacks Rank & Key Picks

CNH Industrial currently carries a Zacks Rank #3 (Hold).

Some better-ranked players in the Auto-Tires-Trucks sector include IAA, Inc. IAA, BRP Inc. DOOO and Fox Factory Holding Corp FOXF. While IAA and BRP sport a Zacks Rank #1 (Strong Buy), Fox Factory holds a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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