December 5, 2011 - CNH Global N.V. (CNH-NYSE) manufactures, markets, and distributes a line of agricultural and construction equipment and parts worldwide. It operates in three segments: Agricultural Equipment, Construction Equipment, and Financial Services.

Construction Equipment offers heavy construction equipment, such as crawler and wheeled excavators, wheel loaders, graders, dozers, and articulated haul trucks; and light construction equipment, including backhoe loaders, skid steer and tracked loaders, mini and midi excavators, compact wheel loaders, and telehandlers primarily under the Case and New Holland Construction brands. This segment serves construction companies, municipalities, local governments, rental fleet owners, quarrying and aggregate mining companies, waste management companies, forestry-related concerns, contractors, residential builders, utilities, road construction companies, landscapers, logistics companies, and farmers.

Financial Services provides financial products and services, including retail financing for the purchase or lease of the company's and other manufacturers' new and used products; and facilitates the sale of insurance products and other financing programs to retail customers. This segment also offers wholesale financing to its dealers and rental equipment operators, as well as financing options to dealers to finance working capital, real estate, and other fixed assets and maintenance equipment.

CNH Global N.V. sells and distributes through dealers and distributors in approximately 170 countries. The company was founded in 1991 and is based in Amsterdam, the Netherlands. CNH Global N.V. is a subsidiary of Fiat Netherlands Holding N.V.

CNH comes from Case, New Holland, the brands CNH sells. They're very big in Europe since they're headquartered there. And that's a concern for some investors. The economies of the euro-zone are at best unsettled, and the uncertainty of any resolution only clouds the picture further. Developers aren't as active so not as much heavy construction machinery is being ordered. Demand for all construction equipment in Europe is down markedly. This will weigh on earnings for at least several quarters.

On the positive side, earnings keep growing. While they went negative in 2009 to minus 48 cents, down from a positive $3.59 in 2008, in 2010, they rebounded to $2.08. This year consensus from 11 analysts is for $3.68 (a 77% improvement). The range goes from $3.14 to $4.21. For 2012, they expect $4.09.

Here's how well the company's doing: in the last 4 quarters, earnings beat analysts' expectations by: 100%; 32.6%; 35.3% and 37.8% respectively. The reason: high commodity crop prices and an increase in planting and farming. Sales should hit $17.63 billion this year, up 22% from last year's $14.47 billion. Making the most contribution: agriculture equipment with all regions showing strong demand. Also helping is more construction equipment sales. That division is on track to show it best margins in 3 years.

One major concern is where this story started: certain countries in Europe, ones like Greece, Italy, Portugal and Spain. Their economies won't be in shape to show much, if any, economic improvement over the next year, even if there is debt relief. As mentioned above, that will bear down somewhat on margins.

Essential Numbers:
- Market Cap: $9.55 billion
- Forward P/E: 9.73
- Price to book: 1.21
- Operating margin: 11.55%
- Profit margin: 5.25%
- Return on assets: 4.11%
- Revenues (last 12 months): $18.2 billon
- Total cash: $4.24 billion
- Current ratio: 1.8
- Book value per share: $32.87
- Beta: 3.00
- 52 week change: 10.88%
- Total shares outstanding: 240 million
- Float: 26.26 million
Fiat owns 89% of the stock.

If you're bullish on an economic recovery, this story only gets better. Even with a slow or decreasing economy, CNH should do well as food, the most basic necessity, will still be in high demand. That means more tractors and combines will be needed. CNH has those.

- Company Web site: www.cnh.com

    Ted Allrich