Dj Apogee Enterprises Inc, Inst Holders, 3Q 2024 (Apog)

CNH Industrial CNH reported third-quarter 2024 adjusted earnings per share (EPS) of 24 cents, down from 42 cents in the prior-year quarter. The figure also missed the Zacks Consensus Estimate of 28 cents.

In the third quarter, consolidated revenues declined nearly 22% from the year-ago level to $4.65 billion and missed the consensus mark of $4.77 billion. The company’s net sales from industrial activities came in at $3.99 billion, down 25% due to lower industry demand and dealer inventory management.

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CNH Industrial N.V. Price, Consensus and EPS Surprise

CNH Industrial N.V. price-consensus-eps-surprise-chart | CNH Industrial N.V. Quote

Segmental Performance

In the third quarter, net sales in the Agriculture segment fell 24% year over year to $3.31 billion due to lower shipment volume. The metric also missed our estimate of $3.46 billion. The segment’s adjusted EBIT came in at $336 million, down 48% year over year due to lower volumes. The figure also missed our estimate of $458.6 million. The adjusted EBIT margin decreased to 10.2% from 14.6%.

The Construction segment’s sales declined 28% year over year to $687 million as a result of lower volume across all regions. The metric also missed our estimate of $748.5 million. Adjusted EBIT came in at $40 million, down 33% year over year due to lower volume and unfavorable net price realization. The figure, however, outpaced our estimate of $27.8 million. The adjusted EBIT margin decreased to 5.8% from 6.3%.

The Financial Services segment’s revenues went up 1% to $659 million, surpassing our estimate of $606.5 million on improved volumes across all regions except EMEA and higher yields in North America. Net income from the segment fell to $78 million from $86 million reported in the year-ago quarter.

Financial Details

CNH Industrial had cash and cash equivalents of $1.8 billion as of Sept. 30, 2024, significantly down from $4.32 billion as of Dec. 31, 2023.

The company’s debt totaled $27.3 billion as of Sept. 30, 2024, down from $27.33 billion as of Dec. 31, 2023.

The company’s net cash provided by operating activities was $791 million compared with $232 million reported in the year-ago period.

CNH reported negative free cash flow from industrial activities of $180 million in the quarter compared with negative free cash flow of $127 million in the third quarter of 2023.

CNH Updates Guidance for 2024

For 2024, Agriculture sales are now expected to decrease 22-23% compared with the earlier projected decline of 15-20%. Adjusted EBIT margin for the Agriculture segment is now expected in the band of 10.5-11.5% compared with the previous estimate of 13-14%. For the Construction segment, sales are expected to decline 21-22% year over year compared with a previous projection of a decline of 15-20%. Adjusted EBIT margin for the Construction segment is projected in the range of 5-6%.

The company expects free cash outflow from industrial activities in the range of $100-$300 million against the previous guidance of inflow of $700-$900 million. Adjusted EPS is now expected between $1.05 and $1.15, down from the previous estimate of $1.30-$1.40.

Zacks Rank & Key Picks

CNH currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the Industrial Products sector are Packaging Corporation of America PKG, Apogee Enterprises, Inc. APOG and Century Aluminum Company CENX, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for PKG’s 2024 sales and earnings suggests year-over-year growth of 7.18% and 4.25%, respectively. EPS estimates for 2024 and 2025 have improved 34 cents and 51 cents, respectively, in the past 30 days.

The Zacks Consensus Estimate for APOG’s fiscal 2024 sales suggests year-over-year growth of 6.08%. EPS estimates for fiscal 2025 and 2026 have improved 20 cents each in the past 60 days.

The Zacks Consensus Estimate for CENX’s 2024 earnings suggests year-over-year growth of 746.81%. EPS estimates for 2024 and 2025 have improved 49 cents and $2.35, respectively, in the past 30 days.

Zacks Investment Research

For those looking to find strong Industrial Products stocks, it is prudent to search for companies in the group that are outperforming their peers. Is Apogee Enterprises (APOG) one of those stocks right now? Let's take a closer look at the stock's year-to-date performance to find out.

Apogee Enterprises is one of 213 companies in the Industrial Products group. The Industrial Products group currently sits at #12 within the Zacks Sector Rank. The Zacks Sector Rank includes 16 different groups and is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors.

The Zacks Rank is a proven model that highlights a variety of stocks with the right characteristics to outperform the market over the next one to three months. The system emphasizes earnings estimate revisions and favors companies with improving earnings outlooks. Apogee Enterprises is currently sporting a Zacks Rank of #1 (Strong Buy).

Within the past quarter, the Zacks Consensus Estimate for APOG's full-year earnings has moved 4.1% higher. This is a sign of improving analyst sentiment and a positive earnings outlook trend.

According to our latest data, APOG has moved about 58.7% on a year-to-date basis. At the same time, Industrial Products stocks have gained an average of 19.3%. This means that Apogee Enterprises is performing better than its sector in terms of year-to-date returns.

Atmus Filtration Technologies (ATMU) is another Industrial Products stock that has outperformed the sector so far this year. Since the beginning of the year, the stock has returned 85.5%.

In Atmus Filtration Technologies' case, the consensus EPS estimate for the current year increased 4.2% over the past three months. The stock currently has a Zacks Rank #2 (Buy).

Breaking things down more, Apogee Enterprises is a member of the Glass Products industry, which includes 4 individual companies and currently sits at #4 in the Zacks Industry Rank. Stocks in this group have gained about 3.3% so far this year, so APOG is performing better this group in terms of year-to-date returns.

On the other hand, Atmus Filtration Technologies belongs to the Pollution Control industry. This 10-stock industry is currently ranked #174. The industry has moved +33.9% year to date.

Apogee Enterprises and Atmus Filtration Technologies could continue their solid performance, so investors interested in Industrial Products stocks should continue to pay close attention to these stocks.

Zacks Investment Research

For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.

The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.

It also includes access to the Zacks Style Scores.

What are the Zacks Style Scores?

The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value Score

Value investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.

Growth Score

Growth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.

Momentum Score

Momentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.

VGM Score

If you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank

The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.

It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.

That's where the Style Scores come in.

To maximize your returns, you want to buy stocks with the highest probability of success. This means picking stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you find yourself looking at stocks with a #3 (Hold) rank, make sure they have Scores of A or B as well to ensure as much upside potential as possible.

The direction of a stock's earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.

A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Apogee Enterprises (APOG)

Apogee Enterprises is a leader in architectural products and services, providing architectural glass, aluminum framing systems and installation services for buildings as well as value-added glass and acrylic for custom picture framing and displays.

APOG is a #1 (Strong Buy) on the Zacks Rank, with a VGM Score of B.

Additionally, the company could be a top pick for growth investors. APOG has a Growth Style Score of B, forecasting year-over-year earnings growth of 6.1% for the current fiscal year.

One analysts revised their earnings estimate higher in the last 60 days for fiscal 2025, while the Zacks Consensus Estimate has increased $0.20 to $5.06 per share. APOG also boasts an average earnings surprise of 19.7%.

With a solid Zacks Rank and top-tier Growth and VGM Style Scores, APOG should be on investors' short list.

Zacks Investment Research

The majority of U.S. stock indices ended lower on Nov. 12, as rising U.S. treasury yields posed a headwind to the equities’ rally witnessed over the past few days following the election results. The dismal performance of the bourses also reflected investors’ concern regarding U.S. inflation data, which is set to be released today.

In such a situation, an investor might not feel confident enough to invest in the stock market. However, a prudent investor knows that this is the right time to buy stocks that are safe bets. To this end, we recommend stocks like Janus Henderson Group JHG, Coastal Financial CCB, Novartis NVS, Apogee Enterprises APOG and InterDigital IDCC. These stocks bear low leverage and, therefore, should be a safer option for investors if they don’t want to lose big in times of market turmoil.

Now, before selecting low-leverage stocks, let’s explore what leverage is and how choosing a low-leverage stock helps investors.

What’s the Significance of Low-Leverage Stocks?

In finance, leverage is a term used to denote the practice of borrowing capital by companies to run their operations smoothly and expand the same. Such borrowings are done through debt financing. But there remains an option for equity finance. This is probably due to the cheap and easy availability of debt over equity financing.

However, debt financing has its share of drawbacks. Particularly, it is desirable only as long as it successfully generates a higher rate of return compared to the interest rate. So, to avoid considerable losses in your portfolio, one should always avoid companies that resort to excessive debt financing.

The crux of safe investment lies in choosing a company that is not burdened with debt, as a debt-free stock is almost impossible to find.

The equity market can be volatile at times, and, as an investor, if you don’t want to lose big time, we suggest you invest in stocks that bear low leverage and are, hence, less risky.

To identify such stocks, historically, several leverage ratios have been developed to measure the amount of debt a company bears. The debt-to-equity ratio is one of the most common ratios.

Analyzing Debt/Equity

Debt-to-Equity Ratio = Total Liabilities/Shareholders’ Equity

This metric is a liquidity ratio that indicates the amount of financial risk a company bears. A lower debt-to-equity ratio reflects improved solvency for a company.

With the third-quarter earnings season in its last lap, investors must be eyeing stocks that have exhibited solid earnings growth in the recent past. But if a stock bears a high debt-to-equity ratio in times of economic downturn, its so-called booming earnings picture might turn into a nightmare.

The Winning Strategy

Considering the factors above, it is prudent to choose stocks with a low debt-to-equity ratio to ensure steady returns.

Yet, an investment strategy based solely on the debt-to-equity ratio might not fetch the desired outcome. To choose stocks that have the potential to give you steady returns, we have expanded our screening criteria to include some other factors.

Here are the other parameters:

Debt/Equity less than X-Industry Median: Stocks that are less leveraged than their industry peers.

Current Price greater than or equal to 10: The stocks must be trading at a minimum of $10 or above.

Average 20-day Volume greater than or equal to 50000: A substantial trading volume ensures that the stock is easily tradable.

Percentage Change in EPS F(0)/F(-1) greater than X-Industry Median: Earnings growth adds to optimism, leading to a stock’s price appreciation.

VGM Score of A or B: Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential.

Estimated One-Year EPS Growth F(1)/F(0) greater than 5: This shows earnings growth expectation.

Zacks Rank #1 or 2: Irrespective of market conditions, stocks with a Zacks Rank #1 or 2 have a proven history of success.

Excluding stocks that have a negative or a zero debt-to-equity ratio, here we present our five picks out of the 13 stocks that made it through the screen.

Janus Henderson: It is an investment management company. It provides investment advisors for equities, fixed income, property and private equity sectors. On Oct. 31, 2024, Janus Henderson announced its third-quarter 2024 results. Its adjusted revenues improved 6.5% year over year in the reported quarter, while adjusted earnings per share rose 7.1%.

The company boasts a long-term earnings growth rate of 22.2%. The Zacks Consensus Estimate for JHG’s 2024 sales suggests an 18% improvement from the 2023 actuals. It currently sports a Zacks Rank #1.

Coastal Financial: It is a bank holding company that provides accounts checking, savings deposits, money market, mortgage and term loans services, as well as card facilities and Internet banking services, through its subsidiaries. On Oct. 28, 2024, Coastal Financial reported its third-quarter 2024 results. Its return on average assets ("ROA") was 1.34% compared with 1.13% for the third quarter of 2023.

The Zacks Consensus Estimate for CCB’s 2024 earnings suggests a 6.4% improvement from the 2023 reported number. The Zacks Consensus Estimate for CCB’s 2024 sales suggests a 31.4% improvement from the 2023 reported number. It currently carries a Zacks Rank #2.

Novartis: It is a pharmaceutical company with experience in core therapeutic areas like cardiovascular, renal and metabolic, immunology, neuroscience and oncology across geographies like the United States, China, Germany and Japan. On Oct. 29, 2024, Novartis announced that its Scemblix (asciminib) has been granted accelerated approval by the US Food and Drug Administration (FDA) for adult patients with newly diagnosed Philadelphia chromosome-positive chronic myeloid leukemia in the chronic phase.

The company boasts a long-term earnings growth rate of 9.1%. The stock delivered a four-quarter average earnings surprise of 2.2%. NVS currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Apogee Enterprises: It is a leader in architectural products and services, providing architectural glass, aluminum framing systems and installation services for buildings as well as value-added glass and acrylic for custom picture framing and displays. On Nov. 4, 2024, Apogee Enterprises announced the completion of the previously announced acquisition of UW Interco, LLC (“UW Solutions”), a vertically integrated manufacturer of high-performance coated substrates used in graphic arts, building products, and other applications, for $242 million in cash. The company expects the acquisition to contribute incremental net sales of approximately $30 million in fiscal 2025.

It delivered a four-quarter average earnings surprise of 19.7%. The Zacks Consensus Estimate for APOG’s fiscal 2025 earnings has improved 3.6% in the past 60 days. It currently sports a Zacks Rank #1.

InterDigital: It is a pioneer in advanced mobile technologies that enables wireless communications and capabilities. On Oct. 31, 2024, the company released its third-quarter 2024 results. The company delivered revenues of $128.7 million, which exceeded the top end of its guidance, driven by the strong performance of its consumer electronics and IoT licensing program.

IDCC currently sports a Zacks Rank #1. The company boasts a long-term earnings growth rate of 17.4%. The Zacks Consensus Estimate for IDCC’s 2024 sales suggests a 56.4% improvement from the 2023 reported figure.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.

Zacks Investment Research