AGCO Corporation - Value
28 Settembre 2012 - 2:00AM
Zacks
AGCO Corporation (AGCO) has one of the more impressive
streaks for earnings surprises, having beaten the Zacks Consensus
Estimate every quarter over the last 5 years. Most recently, this
agricultural equipment maker surprised by nearly 15% in the second
quarter, and also raised its earnings guidance for 2012. With low
valuation metrics, including a price-to-sales (P/S) ratio as low as
0.5, this Zacks #2 Rank (Buy) stock is worth considering as a value
pick.
AGCO’s Winning Streak Continues
On July 26, AGCO Corporation reported second quarter earnings of
$2.08 per share, surpassing the Zacks Consensus Estimate of $1.81.
Profit advanced 53% year over year to $204.9 million. The results
were boosted by higher sales and production volumes, improved
pricing in North America and Western Europe, low levels of material
cost inflation, and synergies from the GSI Holdings
acquisition.
Revenue jumped 14% year over year to $2.7 billion. Barring an
unfavorable currency translation impact, revenues soared roughly
25%. The growth was mainly driven by robust sales from North
America.
North American revenues soared nearly 86% to $733.4 million. The
Asia-Pacific region saw a roughly 52% surge in sales to $101.3
million. In the Europe/Africa/Middle East (EAME) region, sales
improved 0.5% to $1,406.9 million. However, revenues dipped nearly
10% in South America to $448.5 million.
The company raised its adjusted earnings guidance for 2012 to a
range of $5.50 to $5.75 per share from the prior view of $5.50 per
share. Moreover, its Board approved a $50 million share repurchase
program.
GSI Holdings, which AGCO Corporation acquired in 2011, performed
strongly in the second quarter and is expected to contribute to
earnings growth in the second half. In addition, production at the
new assembly facility at the Marktoberdorf plant in Germany is
expected to start during the back half of 2012, increasing the
company’s production capacity and efficiency.
However, the prevailing drought conditions in the U.S., which
have ravaged the Corn Belt, may hurt the demand for AGCO
Corporation’s farm equipment in the remainder of 2012.
The company will report its third-quarter results on October 30.
At the moment, the Zacks Consensus Estimate is calling for $1.01
per share.
Rising Earnings Estimates
The Zacks Consensus Estimate for 2012 has increased 3.4% over
the last 90 days to $5.72 a share, reflecting a projected
annualized growth of roughly 27.7%. For 2013, the Zacks Consensus
Estimate rose 1.2% over the same timeframe to $5.82 per share,
representing an estimated year over year growth of roughly
1.8%.
A Cheap Stock
AGCO Corporation’s cheap valuation should beckon investors
seeking value. In addition to having a low P/S, the stock has an
attractive forward P/E ratio of 8.0. It also has a low
price-to-book (P/B) ratio of 1.4. (A P/S ratio lower than 1.0, a
P/E below 15.0 and a P/B ratio under 3.0 generally indicate value.)
Moreover, the company has a PEG ratio of 0.63, a 37% discount to
the benchmark of 1 for a fairly priced stock.
![](http://www.zacks.com/images/upload_dir/1348767770.jpg)
Founded in 1990, AGCO Corporation makes and distributes
agricultural equipment and related replacement parts globally. The
company, which has a market cap of roughly $4.5 billion, offers a
full range of farm equipment through a wide network of dealers and
distributors in more than 140 countries across the globe. AGCO
Corporation’s product line is categorized under five groups –
tractors, replacement parts, combines, application
equipment/sprayers, and other machinery. The company also
distributes an array of implements, planters, and other equipment
for its product lines.
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