U.S. Markets closed

What Falling Estimates & Price Mean for CNH Industrial (CNHI)

Zacks Equity Research

Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

One such stock that you may want to consider dropping is CNH Industrial N.V. (CNHI), which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #4 (Sell) further confirms weakness in CNHI.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 1 estimate moving down in the past 30 days, compared with just 1 upward revision. This trend has caused the consensus estimate to trend lower, going from 69 cents a share a month ago to its current level of 60 cents.

Also, for the current quarter, CNH Industrial has seen 1 downward estimate revision versus no revision in the opposite direction. However, the consensus estimate trend has remained flat at 19 cents a share over the past 30 days.   

The stock also has seen some pretty dismal trading lately, as the share price has dropped 11.07% in the past month.

So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don’t have a long time horizon to wait.

If you are still interested in the Auto/Tires/Trucks sector, you may instead consider some better-ranked stocks including China Automotive Systems Inc. (CAAS), Gentex Corp. (GNTX) and Meritor, Inc. (MTOR). All these stocks hold a Zacks Rank #1 (Strong Buy) and may be better selections at this time.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

CNH INDUSTRIAL NV (CNHI): Free Stock Analysis Report

CHINA AUTOMOTIVE SYS INC (CAAS): Free Stock Analysis Report

GENTEX CP (GNTX): Free Stock Analysis Report

MERITOR INC (MTOR): Free Stock Analysis Report

Zacks Investment Research