Is a Breakdown in the Charts for CNH Industrial? – June 29, 2021

CNH Industrial (CNHI) is a global manufacturer of heavy machinery, with a range of products including agricultural and construction equipment, commercial vehicles, and powertrain components. One of its most recognizable brands, Case IH, has served farmers for generations.

The company is developing several products and technologies to keep up with the latest technological advancements and emission-control procedures. These upgraded product offerings should help the company achieve new business contracts.

CNHI has a high current ratio of 3, indicating its current assets are higher than its current liabilities, but its debt to equity of 3.5 is concerning. The company’s net profit margin is also flat. Over the past year, earnings are down almost 100%, although analysts expect it to rebound by growing earnings 485.7% year over year this quarter.

While the stock’s trailing P/E of 1,600 is extremely high, its forward P/E is only 15.04. It also has a PEG ratio of 0.5. The stock has shown bullish long-term momentum, but mixed recent performance, as shown on the chart below.

Take a look at the 1-year chart of CNHI below with the added notations:

CNHI has formed an important level to watch at the $16 (green) mark, as that level has provided both support and resistance over the past 6 months. The stock looks like it’s falling back down to the level again, and a break below it could open the door to lower prices.

A trader could enter a short position if CNHI breaks below $16.

Author: Christian Tharp, CMT