This Stock Is Outperforming the Market yet Still Looks 39% Undervalued

CNH Industrial is outperforming the broad US stock market by leaps and bounds in 2026, thanks to a combination of improving fundamentals and normalizing industry indicators. And we think there could be more outperformance ahead. Having taken extensive cost actions during the recent downturn and realizing positive price/cost, CNH’s agriculture segment should see clear growth and margin expansion. Meanwhile, the construction business is generating improving sales, especially in North America, and margins are poised to improve in 2027. Despite its runup this year, the stock still looks very undervalued, trading 39% below our $21 fair value estimate. CNH was one of Morningstar Chief US Market Strategist Dave Sekera’s stock picks on a recent episode of The Morning Filter podcast, 4 Stocks to Buy Before They Rise Further.

CNH and top global competitor Deere DE have cultivated iconic brands for industrialized agriculture around the world. This has resulted in a large, loyal installed base of products and customers. Both companies maintain independent dealer networks with thousands of points of sale and global reach. They also operate captive finance subsidiaries to bundle financing with purchasing, enhancing their value proposition. The next strategic chapter for CNH is precision agriculture—incorporating digital technologies into agricultural equipment to enhance crop yields and drive other efficiencies.

Key Morningstar Metrics for CNH

• Fair Value Estimate
  : $21
• Star Rating
  : 5 Stars
• Economic Moat Rating
  : Narrow
• Uncertainty Rating
  : Medium

Economic Moat Rating

We believe CNH has a narrow economic moat underpinned by intangible assets and switching costs. Intangible assets include its Case and New Holland brands, dealer network, captive finance subsidiary, and technology. Brand equity grows from offering high-quality, reliable products that boost farmers’ productivity. Farmers have used CNH equipment for generations, and there is a very loyal installed base of customers. A robust dealer network gives customers first-rate support, with timely availability of spare parts and repairs. The captive finance subsidiary allows CNH to offer customers a more comprehensive, one-stop-shop experience. Owing to all these characteristics, a degree of pricing power is evident in the agriculture segment’s returns.

Read more about CNH’s moat rating.

Fair Value Estimate for CNH Stock

Our $21 fair value estimate equates to 41 times our depressed 2026 earnings per share estimate. The valuation is far less demanding based on CNH’s (prior peak) 2023 results, with implied price/earnings of just 13 times. Management’s 2026 guidance likely reflects a cyclical trough. We anticipate flat performance in 2026, followed by a likely recovery in 2027 and beyond. For the core agriculture segment, we forecast approximately 15% average growth over the remainder of our five-year horizon, with operating margin expanding to 16%. Our forecast for the construction segment is more conservative. We forecast an average growth rate of almost 10% and modest operating margin expansion alongside the cyclical recovery to 5%.

Read more about CNH’s fair value estimate.

Risk and Uncertainty

CNH’s operating results are strongly tied to agriculture markets, which are a function of farm profitability. Farm income derives from many variables, including the prices of key commodities (such as corn, soybeans, and wheat), input costs (such as seeds, fuel, fertilizers, and pesticides/herbicides), and crop yields (output). Downturns can extend longer than 12 months and result in revenue contraction of more than 20%. These uncertainties have been exacerbated by global trade tensions. Management understands the cyclical nature of the business and maintains a healthy balance sheet in addition to strict inventory control to ensure flexibility to continuously invest in the business.

Read more about CNH’s risk and uncertainty.

CNH Bulls Say

• CNH will keep up with technological developments in precision agriculture and narrow its performance gap versus Deere.
• The company retrofits more of its machines in the installed base with margin-accretive connected technology, structurally improving margins and reducing cyclicality.
• 2026 is likely the trough of the agriculture cycle, with stronger revenue and earnings growth ahead.

CNH Bears Say

• The company loses share because it can’t keep up as the fast follower.
• Management engages in value-destructive mergers and acquisitions.
• CNH’s performance erodes with the fate of its customers, as the company is more of a conventional manufacturer versus a technology-enabled solution provider.

This article was compiled by Susan Dziubinski and Sylvia Hauser. Data as of Sept. 30, 2026, close unless otherwise noted.