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2 Farm Equipment Stocks Worth Watching Amid Industry Challenges
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Despite weak commodity prices marring the near term outlook of the Zacks Manufacturing - Farm Equipment industry, it will benefit from increased agricultural equipment demand to meet the food requirements of a growing population. AGCO Corp. (AGCO - Free Report) and Lindsay (LNN - Free Report) are well-poised to capitalize on this demand, backed by their efforts to grow their products.
Focusing on revolutionizing agriculture with technology to make farming automated, easy to use and more precise across the production process is expected to be another major catalyst. These players, along with others like Deere & Company (DE - Free Report) , CNH Industrial (CNH - Free Report) , are investing heavily in upping their technology game.
About the Industry
The Zacks Manufacturing - Farm Equipment industry comprises companies that manufacture agricultural equipment. These equipment include tractors, combines, cotton pickers and harvesting equipment; tillage, seeding and application equipment, consisting of sprayers, nutrient management and soil preparation machinery; and hay and forage equipment, comprising self-propelled forage harvesters and attachments, balers and mowers. Some companies in the industry produce turf and utility equipment, consisting of riding lawn equipment and walk-behind mowers, golf course equipment, utility vehicles, commercial mowing equipment, and garden tillers and snow throwers. Some participants manufacture irrigation equipment. Deere, Kubota and CNH Industrial are presently the top three global manufacturers of agricultural equipment (in that order).
Trends Shaping the Future of the Manufacturing - Farm Equipment Industry
Low Commodity Prices Projections are Concerning: Per the latest projections from the U.S. Department of Agriculture, net farm income is set to reach $179.8 billion in 2025. (slightly below earlier estimate of $180.1 billion). The figure suggests a 40.7% increase from the prior year. In inflation-adjusted terms, net farm income is forecast to increase 37.2%. However, much of this growth reflects a $30.4 billion increase in direct government farm payments to $40.5 billion for 2025. Meanwhile, crop receipts are anticipated to decline 2.5% (previous expectation was 2.3%) from the prior year due to lower revenues for soybeans, corn and wheat. This will be offset by an 11.2% increase in animal and animal products receipts. Production expenses are also expected to move up 2.6%, leading to more pressure on farmers.
Demand for Food to Fuel the Industry: Despite the ongoing volatility in commodity prices and lower crop receipts, agricultural equipment demand will continue to be supported by increased global demand for food, stemming from population growth and an increasing proportion of the population aspiring for better living standards. With farm sizes increasing, there is a greater need for labor, but escalating labor costs are prompting farmers to turn to mechanization. Additionally, subsidies on agricultural machinery purchases are enabling even small-scale farmers to invest in equipment.
Pricing, Cost-Cutting Actions to Boost Margins: The industry has not been immune to the rampant cost inflation prevailing in the sector. Constraints on the availability of raw materials, labor and trucking resources have led to higher lead times for deliveries. However, the industry players have recently been reporting improvements in the supply chain. The companies have been implementing pricing and cost-reduction actions, which are likely to help sustain margins.
Technologically Advanced Machinery Gaining Popularity: Customers are increasingly relying on advanced technology, smart farming solutions and mechanization to run their operations. Thus, the industry participants are enhancing investments in launching products equipped with advanced technologies and features to keep up with customers' evolving demands. Precision agriculture technology is expected to be a key catalyst, as it enables farmers to increase yield with reduced input costs and sustainability benefits.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Manufacturing - Farm Equipment industry is part of the broader Zacks Industrial Products sector. The industry currently carries a Zacks Industry Rank #220, which places it at the bottom 9% of 243 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dim prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Despite the bleak near-term prospects of the industry, we will present a few Manufacturing - Farm Equipment stocks that can be retained in one’s portfolio. It is worth taking a look at the industry’s stock-market performance and valuation picture before that.
Industry vs. Broader Market
The Zacks Manufacturing - Farm Equipment industry has outperformed its sector but lagged the Zacks S&P 500 composite over the past 12 months. Stocks in this industry have gained 11% in the past 12 months compared with the S&P 500’s growth of 16.5%. The Industrial Products sector has risen 3.7% in the said time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing EV/EBITDA ratio, which is a commonly used multiple for valuing farm equipment stocks, we see that the industry is currently trading at 25.38X compared with the S&P 500’s 18.25X. The Industrial Products sector’s trailing 12-month EV/EBITDA is 24.41X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) Ratio (TTM)
Enterprise Value/EBITDA (EV/EBITDA) Ratio (TTM)
Over the last five years, the industry traded as high as 28.39X and as low as 14.08X, the median being 19.68X.
2 Manufacturing - Farm Equipment Stocks to Keep an Eye on
AGCO: The company has been gaining from increasing replacement demand for old equipment. It has been investing in products, precision farming technology and smart farming solutions to improve distribution and enhance digital capabilities to strengthen product offerings. These efforts and the company’s cost-control measures have driven margin expansion over the past few quarters. AGCO is focusing on strategic transformation. It intends to streamline and focus its portfolio of agricultural machinery and precision agriculture technology solutions. Last year, it completed the largest agricultural technology deal in history to create the PTx Trimble joint venture, which was merged with its Precision Planting business to form PTx. It boasts an industry-leading portfolio of mixed fleet, precision agricultural technologies and solutions, boosting its competitive edge and long-term prospects.
AGCO has an estimated long-term earnings growth rate of 12.6%. The consensus estimate for AGCO’s 2025 earnings has moved up 4% in the past 60 days. It has a trailing four-quarter earnings surprise of 327.7%, on average. This Duluth, GA-based company currently carries a Zacks Rank #3 (Hold).
Lindsay: The company reported 11% growth in revenues in fiscal 2025 (ended Oct. 31, 2025) on higher irrigation and infrastructure revenues. The company also reported record earnings per share of $6.78. Earlier this year, it acquired a 49.9% minority interest in Pessl Instruments GmbH. This will help accelerate innovations in water management and increase LNN’s global reach. Project opportunities in developing international irrigation markets continue to be robust, driven by food security and water scarcity concerns. The company is also well-positioned to gain from demand for its Road Zipper System, which is gaining popularity globally for its faster implementation and lower costs for constructing lanes. Lindsay continues to maintain a robust balance sheet and capital allocation is focused on delivering value to shareholders while investing in growth opportunities and innovation.
The Zacks Consensus Estimate for the Omaha, NE-based company’s fiscal 2025 earnings has moved up 1% over the past 60 days. LNN has a trailing four-quarter earnings surprise of 18.1%, on average. It currently carries a Zacks Rank of 3.
Price & Consensus: LNN
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2 Farm Equipment Stocks Worth Watching Amid Industry Challenges
Despite weak commodity prices marring the near term outlook of the Zacks Manufacturing - Farm Equipment industry, it will benefit from increased agricultural equipment demand to meet the food requirements of a growing population. AGCO Corp. (AGCO - Free Report) and Lindsay (LNN - Free Report) are well-poised to capitalize on this demand, backed by their efforts to grow their products.
Focusing on revolutionizing agriculture with technology to make farming automated, easy to use and more precise across the production process is expected to be another major catalyst. These players, along with others like Deere & Company (DE - Free Report) , CNH Industrial (CNH - Free Report) , are investing heavily in upping their technology game.
About the Industry
The Zacks Manufacturing - Farm Equipment industry comprises companies that manufacture agricultural equipment. These equipment include tractors, combines, cotton pickers and harvesting equipment; tillage, seeding and application equipment, consisting of sprayers, nutrient management and soil preparation machinery; and hay and forage equipment, comprising self-propelled forage harvesters and attachments, balers and mowers. Some companies in the industry produce turf and utility equipment, consisting of riding lawn equipment and walk-behind mowers, golf course equipment, utility vehicles, commercial mowing equipment, and garden tillers and snow throwers. Some participants manufacture irrigation equipment. Deere, Kubota and CNH Industrial are presently the top three global manufacturers of agricultural equipment (in that order).
Trends Shaping the Future of the Manufacturing - Farm Equipment Industry
Low Commodity Prices Projections are Concerning: Per the latest projections from the U.S. Department of Agriculture, net farm income is set to reach $179.8 billion in 2025. (slightly below earlier estimate of $180.1 billion). The figure suggests a 40.7% increase from the prior year. In inflation-adjusted terms, net farm income is forecast to increase 37.2%. However, much of this growth reflects a $30.4 billion increase in direct government farm payments to $40.5 billion for 2025. Meanwhile, crop receipts are anticipated to decline 2.5% (previous expectation was 2.3%) from the prior year due to lower revenues for soybeans, corn and wheat. This will be offset by an 11.2% increase in animal and animal products receipts. Production expenses are also expected to move up 2.6%, leading to more pressure on farmers.
Demand for Food to Fuel the Industry: Despite the ongoing volatility in commodity prices and lower crop receipts, agricultural equipment demand will continue to be supported by increased global demand for food, stemming from population growth and an increasing proportion of the population aspiring for better living standards. With farm sizes increasing, there is a greater need for labor, but escalating labor costs are prompting farmers to turn to mechanization. Additionally, subsidies on agricultural machinery purchases are enabling even small-scale farmers to invest in equipment.
Pricing, Cost-Cutting Actions to Boost Margins: The industry has not been immune to the rampant cost inflation prevailing in the sector. Constraints on the availability of raw materials, labor and trucking resources have led to higher lead times for deliveries. However, the industry players have recently been reporting improvements in the supply chain. The companies have been implementing pricing and cost-reduction actions, which are likely to help sustain margins.
Technologically Advanced Machinery Gaining Popularity: Customers are increasingly relying on advanced technology, smart farming solutions and mechanization to run their operations. Thus, the industry participants are enhancing investments in launching products equipped with advanced technologies and features to keep up with customers' evolving demands. Precision agriculture technology is expected to be a key catalyst, as it enables farmers to increase yield with reduced input costs and sustainability benefits.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Manufacturing - Farm Equipment industry is part of the broader Zacks Industrial Products sector. The industry currently carries a Zacks Industry Rank #220, which places it at the bottom 9% of 243 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dim prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Despite the bleak near-term prospects of the industry, we will present a few Manufacturing - Farm Equipment stocks that can be retained in one’s portfolio. It is worth taking a look at the industry’s stock-market performance and valuation picture before that.
Industry vs. Broader Market
The Zacks Manufacturing - Farm Equipment industry has outperformed its sector but lagged the Zacks S&P 500 composite over the past 12 months. Stocks in this industry have gained 11% in the past 12 months compared with the S&P 500’s growth of 16.5%. The Industrial Products sector has risen 3.7% in the said time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing EV/EBITDA ratio, which is a commonly used multiple for valuing farm equipment stocks, we see that the industry is currently trading at 25.38X compared with the S&P 500’s 18.25X. The Industrial Products sector’s trailing 12-month EV/EBITDA is 24.41X. This is shown in the charts below.
Enterprise Value/EBITDA (EV/EBITDA) Ratio (TTM)
Enterprise Value/EBITDA (EV/EBITDA) Ratio (TTM)
Over the last five years, the industry traded as high as 28.39X and as low as 14.08X, the median being 19.68X.
2 Manufacturing - Farm Equipment Stocks to Keep an Eye on
AGCO: The company has been gaining from increasing replacement demand for old equipment. It has been investing in products, precision farming technology and smart farming solutions to improve distribution and enhance digital capabilities to strengthen product offerings. These efforts and the company’s cost-control measures have driven margin expansion over the past few quarters. AGCO is focusing on strategic transformation. It intends to streamline and focus its portfolio of agricultural machinery and precision agriculture technology solutions. Last year, it completed the largest agricultural technology deal in history to create the PTx Trimble joint venture, which was merged with its Precision Planting business to form PTx. It boasts an industry-leading portfolio of mixed fleet, precision agricultural technologies and solutions, boosting its competitive edge and long-term prospects.
AGCO has an estimated long-term earnings growth rate of 12.6%. The consensus estimate for AGCO’s 2025 earnings has moved up 4% in the past 60 days. It has a trailing four-quarter earnings surprise of 327.7%, on average. This Duluth, GA-based company currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price & Consensus: AGCO
Lindsay: The company reported 11% growth in revenues in fiscal 2025 (ended Oct. 31, 2025) on higher irrigation and infrastructure revenues. The company also reported record earnings per share of $6.78. Earlier this year, it acquired a 49.9% minority interest in Pessl Instruments GmbH. This will help accelerate innovations in water management and increase LNN’s global reach. Project opportunities in developing international irrigation markets continue to be robust, driven by food security and water scarcity concerns. The company is also well-positioned to gain from demand for its Road Zipper System, which is gaining popularity globally for its faster implementation and lower costs for constructing lanes. Lindsay continues to maintain a robust balance sheet and capital allocation is focused on delivering value to shareholders while investing in growth opportunities and innovation.
The Zacks Consensus Estimate for the Omaha, NE-based company’s fiscal 2025 earnings has moved up 1% over the past 60 days. LNN has a trailing four-quarter earnings surprise of 18.1%, on average. It currently carries a Zacks Rank of 3.
Price & Consensus: LNN