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Why Is AGCO Corp (AGCO) Down 6.7% Since the Last Earnings Report?
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It has been about a month since the last earnings report for AGCO Corporation (AGCO - Free Report) . Shares have lost about 6.7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
AGCO Corp. Beats Q4 Earnings & Revenues; Outlook Positive
AGCO Corp. reported a year-over-year gain of 5% in its fourth-quarter 2016 adjusted earnings to $0.84 per share. Earnings comfortably beat the Zacks Consensus Estimate of $0.71.
Including restructuring and other infrequent expenses, earnings in the quarter were $0.77 per share compared with $0.73 in the prior-year quarter.
AGCO Corp. reported revenues of $2.09 billion, a 6.9% increase from $1.96 billion in the year-ago quarter. Further, revenues surpassed the Zacks Consensus Estimate of $1.95 billion. Excluding unfavorable currency translation impacts of approximately 1.8%, net sales climbed approximately 8.7% year over year.
Operational Update
Cost of sales went up 7% to $1.67 billion from $1.56 billion in the year-ago quarter. Gross profit was $420 million in the quarter, up 5.8% from $397 million in the prior-year quarter. Gross margin was 20.1%, which reflects a year-over-year contraction of 20 basis points (bps).
Selling, general and administrative expenses were up 1.2% year over year to $224.8 million. Adjusted income from operations increased 5.2% year over year to $97.8 million. Consequently, operating margin remained flat year over year at 4.7%.
Segment Performance
Sales at the North America segment increased 3% year over year to $447.4 million in the quarter. The segment posted loss of $4.9 million, compared to a profit of $7 million in the year-ago quarter.
Sales at the South America segment surged 63.6% year over year to $308 million. The segment reported operating income of $13.6 million, compared to an operating loss of $4.4 million in the year-earlier quarter.
The EAME (Europe/ Africa/ Middle East) segment’s sales were $1,187 million, down 2% from the year-ago quarter. EAME’s operating income dipped 5.5% to $125.8 million from $132.7 million in the prior-year quarter.
Sales at the Asia/Pacific segment jumped 21.8% year over year to $151 million from $124 million a year ago. The segment reported an income of $7.5 million, as against the year-ago quarter loss of $2.2 million.
Financial Update
AGCO Corp. reported cash and cash equivalents of $429.7 million at the end of 2016, up from $426.7 million at 2015 end. The company recorded cash flow from operations of $369.5 million in 2016 compared with $524.2 million in the year-ago period.
During the year ended Dec 31, 2016, AGCO Corp. entered into accelerated share repurchase agreements with a financial institution to repurchase an aggregate of $212.5 million of shares of its common stock. AGCO Corp. received approximately 4,005,643 shares during the year ended Dec 31, 2016 related to the ASRs.
2016 Performance
AGCO Corp. posted earnings of $2.47 per share for 2016, which plunged 23.8% year over year. Earnings missed the Zacks Consensus Estimate of $2.34. Revenues for full-year 2016 edged down 0.8% year over year to $7.4 billion from $7.5 billion in 2015. Revenues beat the Zacks Consensus Estimate of $7.3 billion.
Guidance
AGCO Corp. guided its net sales to be approximately $7.4 billion for 2017. Gross and operating margins are likely to improve from 2016 levels, reflecting the positive impact of pricing and cost-reduction efforts. Based on these assumptions, earnings per share for 2017 are targeted to be approximately $2.50.
In 2017, AGCO Corp. anticipates that industry conditions will remain near the bottom of the agricultural equipment cycle in key markets. The company remains focused on cost and expense reduction through globalizing processes, reducing complexity and better leveraging scale. In addition, AGCO Corp. will continue to make long-term investments to raise the efficiency of factories, improve service levels and strengthen product offering. However, softer industry demand across North America and Europe will hamper its results.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. There have been six downward revisions for the current quarter. In the past month, the consensus estimate has shifted downward by 245.37% due to these changes.
At this time, AGCO Corp.'s stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value and growth investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Interestingly,the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is AGCO Corp (AGCO) Down 6.7% Since the Last Earnings Report?
It has been about a month since the last earnings report for AGCO Corporation (AGCO - Free Report) . Shares have lost about 6.7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
AGCO Corp. Beats Q4 Earnings & Revenues; Outlook Positive
AGCO Corp. reported a year-over-year gain of 5% in its fourth-quarter 2016 adjusted earnings to $0.84 per share. Earnings comfortably beat the Zacks Consensus Estimate of $0.71.
Including restructuring and other infrequent expenses, earnings in the quarter were $0.77 per share compared with $0.73 in the prior-year quarter.
AGCO Corp. reported revenues of $2.09 billion, a 6.9% increase from $1.96 billion in the year-ago quarter. Further, revenues surpassed the Zacks Consensus Estimate of $1.95 billion. Excluding unfavorable currency translation impacts of approximately 1.8%, net sales climbed approximately 8.7% year over year.
Operational Update
Cost of sales went up 7% to $1.67 billion from $1.56 billion in the year-ago quarter. Gross profit was $420 million in the quarter, up 5.8% from $397 million in the prior-year quarter. Gross margin was 20.1%, which reflects a year-over-year contraction of 20 basis points (bps).
Selling, general and administrative expenses were up 1.2% year over year to $224.8 million. Adjusted income from operations increased 5.2% year over year to $97.8 million. Consequently, operating margin remained flat year over year at 4.7%.
Segment Performance
Sales at the North America segment increased 3% year over year to $447.4 million in the quarter. The segment posted loss of $4.9 million, compared to a profit of $7 million in the year-ago quarter.
Sales at the South America segment surged 63.6% year over year to $308 million. The segment reported operating income of $13.6 million, compared to an operating loss of $4.4 million in the year-earlier quarter.
The EAME (Europe/ Africa/ Middle East) segment’s sales were $1,187 million, down 2% from the year-ago quarter. EAME’s operating income dipped 5.5% to $125.8 million from $132.7 million in the prior-year quarter.
Sales at the Asia/Pacific segment jumped 21.8% year over year to $151 million from $124 million a year ago. The segment reported an income of $7.5 million, as against the year-ago quarter loss of $2.2 million.
Financial Update
AGCO Corp. reported cash and cash equivalents of $429.7 million at the end of 2016, up from $426.7 million at 2015 end. The company recorded cash flow from operations of $369.5 million in 2016 compared with $524.2 million in the year-ago period.
During the year ended Dec 31, 2016, AGCO Corp. entered into accelerated share repurchase agreements with a financial institution to repurchase an aggregate of $212.5 million of shares of its common stock. AGCO Corp. received approximately 4,005,643 shares during the year ended Dec 31, 2016 related to the ASRs.
2016 Performance
AGCO Corp. posted earnings of $2.47 per share for 2016, which plunged 23.8% year over year. Earnings missed the Zacks Consensus Estimate of $2.34. Revenues for full-year 2016 edged down 0.8% year over year to $7.4 billion from $7.5 billion in 2015. Revenues beat the Zacks Consensus Estimate of $7.3 billion.
Guidance
AGCO Corp. guided its net sales to be approximately $7.4 billion for 2017. Gross and operating margins are likely to improve from 2016 levels, reflecting the positive impact of pricing and cost-reduction efforts. Based on these assumptions, earnings per share for 2017 are targeted to be approximately $2.50.
In 2017, AGCO Corp. anticipates that industry conditions will remain near the bottom of the agricultural equipment cycle in key markets. The company remains focused on cost and expense reduction through globalizing processes, reducing complexity and better leveraging scale. In addition, AGCO Corp. will continue to make long-term investments to raise the efficiency of factories, improve service levels and strengthen product offering. However, softer industry demand across North America and Europe will hamper its results.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. There have been six downward revisions for the current quarter. In the past month, the consensus estimate has shifted downward by 245.37% due to these changes.
AGCO Corporation Price and Consensus
AGCO Corporation Price and Consensus | AGCO Corporation Quote
VGM Scores
At this time, AGCO Corp.'s stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value and growth investors than momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Interestingly,the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.