AGCO AGCO Corp

AGCO Corp (AGCO) announced the redemption of its Senior Subordinated Notes due 2014 with a coupon rate of 6.875%. The redemption will be done on May 2, 2011. In order to redeem the debt the company will raise a new 5 year €200 million senior unsecured term loan from Rabobank Nederland.

In addition to the principal and interest the company will also pay a premium of 1.146%, which is likely to have a negative impact on  its second quarter results, but not on the full-year results.

AGCO’s reported earnings more than doubled to 88 cents per share in the fourth quarter, from 42 cents in the year-ago quarter, beating the Zacks Consensus Estimate of 76 cents.

The company ended the fourth quarter with $719.9 million of cash and cash equivalents compared with $651.4 million during the year-ago period. During the quarter the company also generated operating cash flows of $438.7 million compared with $347.9 million in the prior year. Free cash flow for the year amounted to $271.6 million compared with $141.3 million in fiscal 2009.

As of December 31, 2010, the debt-to-capitalization ratio improved marginally to 14.3% from 15.0% as of September 30, 2010 and 15.9% as of December 31, 2009.

For the full year, the company is now guiding EPS in the range of $2.50 to $2.75, while revenue is expected in the range of $7.6 billion to $7.9 billion.

With a full product line of farm equipment and a wide network of dealers and distributors, we believe AGCO is well positioned to capitalize on the need for increased food production, driven by worldwide population growth over the long term.

Moreover, the company is also looking to expand operations in the high-growth emerging markets, which bodes well for future operating performance. We currently have a Zacks #3 Rank (short-term Hold recommendation) on the stock.

AGCO Corporation is a leading manufacturer and distributor of agricultural equipment and related replacement parts. Its product line is categorized under five groups: tractors, replacement parts, combines, application equipment/sprayers and other machinery.

The company operates in four geographical segments: Europe/Africa/ the Middle East (EAME), South America, North America and Asia-Pacific. AGCO competes with CNH Global NV (CNH), Deere & Company (DE) and Kubota Corporation (KUB).

 
AGCO CORP (AGCO): Free Stock Analysis Report
 
CNH GLOBAL NV (CNH): Free Stock Analysis Report
 
DEERE & CO (DE): Free Stock Analysis Report
 
KUBOTA CORP ADR (KUB): Free Stock Analysis Report
 
Zacks Investment Research