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Here's Why it's Worth Investing in AGCO Corp (AGCO) Stock Now
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AGCO Corporation (AGCO - Free Report) looks promising at the moment, aided by agriculture equipment demand, the company’s cost-control actions as well as investments in products, technology and acquisitions. We are positive about the company’s prospects and believe that this is the right time to add the stock to your portfolio as it is poised to carry on with the bullish momentum.
AGCO’s shares have appreciated 40.6% over the past three months, outperforming the industry’s growth of 34.8%. The company has an estimated long-term earnings growth rate of 3.7%.
The company currently sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities.
Let's delve deeper into the factors that make the AGCO stock a compelling investment option at the moment.
What’s Working in Favor of AGCO?
Earnings & Sales Beat Estimates in Q2
AGCO’s second-quarter 2020 adjusted earnings per share of $1.11 surpassed the Zacks Consensus Estimate of 7 cents. Revenues of $2,007 million also beat the Zacks Consensus Estimate of $1,743 million.
Positive Earnings Surprise History
The company has a trailing four-quarter average earnings surprise of 409.54%.
Healthy Growth Projections
For the current quarter, the Zacks Consensus Estimate for earnings is currently pegged at 94 cents, indicating year-over-year growth of 14.6%.
Cheap Valuation
AGCO’s trailing 12-month EV/EBITDA ratio is 6.9, while the industry's average trailing 12-month EV/EBITDA is 12.7. Consequently, the stock is cheaper at this point based on the ratio.
Underpriced
AGCO’s price-to-earnings ratio suggests that shares are underpriced currently, which seems to be attractive to investors. The company has a trailing P/E ratio of 19.3, below the industry's average of 22.7.
Growth Drivers in Place
The U.S. farm sector seems to be showing early signs of stabilization following the passage of the United States Mexico Canada Agreement (USMCA) and the Phase 1 trade agreement with China. Per the U.S. Department of Agriculture's (USDA) latest available projections, net farm income is anticipated to improve 3.3% year over year to $96.7 billion in 2020. This will make farmers resume their spending on agricultural equipment, which will boost the company’s performance. Further, replacement demand for aged fleet will drive farm equipment demand. Moreover, the $16-billion COVID-19 Aid Package announced by the USDA for U.S. farmers and livestock producers is likely to marginally offset the unfavorable impact of lower commodity prices.
Global crop production is healthy and set for another record crop year with farm operations working at normal levels. Stronger grain export demand and supportive wheat prices project favorable farm economics for Western European farmers. The European dairy and livestock markets have now stabilized after weakening earlier this year. Benefit of a robust first crop in Brazil and Argentina as well as favorable-exchange rates are supporting relatively positive economics in South America. Moreover, AGCO is likely to witness stellar growth in its grain and protein business on solid protein production and increased protein consumption in the days ahead.
AGCO continues to invest in products, premium technology and smart farming solutions to improve the distribution and enhance digital capabilities in order to drive margins and strengthen product offerings. The company has been making investments to enhance and expand its product lines, upgrade system capabilities, as well as improve factory productivity. AGCO has completed two acquisitions in the past few years. It acquired Precision Planting, which is a leading manufacturer of high-tech planting equipment. The acquisition helped expand the company’s precision farming technology offerings on a global basis. Moreover, it purchased the forage division of the Lely Group, which significantly enhanced its hay and forage product line in Europe, fueling growth in this market.
The company is implementing cost-cutting actions and has suspended further share repurchases in order to preserve liquidity amid the current turbulent situation, while expecting to maintain the payment of its quarterly dividend.
Other Stocks to Consider
A few other top-ranked stocks in the Industrial Products sector include Silgan Holdings, Inc. (SLGN - Free Report) , IIVI Incorporated and SiteOne Landscape Supply, Inc. (SITE - Free Report) . Silgan Holdings and IIVI Incorporated sport a Zacks Rank #1, while SiteOne carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Silgan has a projected earnings growth rate of 28.7% for 2020. The company’s shares have gained 22% so far this year.
IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 37% in the past year.
SiteOne Landscape has an expected earnings growth rate of 15.4% for the current year. The stock has appreciated 41% year to date.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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Here's Why it's Worth Investing in AGCO Corp (AGCO) Stock Now
AGCO Corporation (AGCO - Free Report) looks promising at the moment, aided by agriculture equipment demand, the company’s cost-control actions as well as investments in products, technology and acquisitions. We are positive about the company’s prospects and believe that this is the right time to add the stock to your portfolio as it is poised to carry on with the bullish momentum.
AGCO’s shares have appreciated 40.6% over the past three months, outperforming the industry’s growth of 34.8%. The company has an estimated long-term earnings growth rate of 3.7%.
The company currently sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 or 2 (Buy), offer the best investment opportunities.
Let's delve deeper into the factors that make the AGCO stock a compelling investment option at the moment.
What’s Working in Favor of AGCO?
Earnings & Sales Beat Estimates in Q2
AGCO’s second-quarter 2020 adjusted earnings per share of $1.11 surpassed the Zacks Consensus Estimate of 7 cents. Revenues of $2,007 million also beat the Zacks Consensus Estimate of $1,743 million.
Positive Earnings Surprise History
The company has a trailing four-quarter average earnings surprise of 409.54%.
Healthy Growth Projections
For the current quarter, the Zacks Consensus Estimate for earnings is currently pegged at 94 cents, indicating year-over-year growth of 14.6%.
Cheap Valuation
AGCO’s trailing 12-month EV/EBITDA ratio is 6.9, while the industry's average trailing 12-month EV/EBITDA is 12.7. Consequently, the stock is cheaper at this point based on the ratio.
Underpriced
AGCO’s price-to-earnings ratio suggests that shares are underpriced currently, which seems to be attractive to investors. The company has a trailing P/E ratio of 19.3, below the industry's average of 22.7.
Growth Drivers in Place
The U.S. farm sector seems to be showing early signs of stabilization following the passage of the United States Mexico Canada Agreement (USMCA) and the Phase 1 trade agreement with China. Per the U.S. Department of Agriculture's (USDA) latest available projections, net farm income is anticipated to improve 3.3% year over year to $96.7 billion in 2020. This will make farmers resume their spending on agricultural equipment, which will boost the company’s performance. Further, replacement demand for aged fleet will drive farm equipment demand. Moreover, the $16-billion COVID-19 Aid Package announced by the USDA for U.S. farmers and livestock producers is likely to marginally offset the unfavorable impact of lower commodity prices.
Global crop production is healthy and set for another record crop year with farm operations working at normal levels. Stronger grain export demand and supportive wheat prices project favorable farm economics for Western European farmers. The European dairy and livestock markets have now stabilized after weakening earlier this year. Benefit of a robust first crop in Brazil and Argentina as well as favorable-exchange rates are supporting relatively positive economics in South America. Moreover, AGCO is likely to witness stellar growth in its grain and protein business on solid protein production and increased protein consumption in the days ahead.
AGCO continues to invest in products, premium technology and smart farming solutions to improve the distribution and enhance digital capabilities in order to drive margins and strengthen product offerings. The company has been making investments to enhance and expand its product lines, upgrade system capabilities, as well as improve factory productivity. AGCO has completed two acquisitions in the past few years. It acquired Precision Planting, which is a leading manufacturer of high-tech planting equipment. The acquisition helped expand the company’s precision farming technology offerings on a global basis. Moreover, it purchased the forage division of the Lely Group, which significantly enhanced its hay and forage product line in Europe, fueling growth in this market.
The company is implementing cost-cutting actions and has suspended further share repurchases in order to preserve liquidity amid the current turbulent situation, while expecting to maintain the payment of its quarterly dividend.
Other Stocks to Consider
A few other top-ranked stocks in the Industrial Products sector include Silgan Holdings, Inc. (SLGN - Free Report) , IIVI Incorporated and SiteOne Landscape Supply, Inc. (SITE - Free Report) . Silgan Holdings and IIVI Incorporated sport a Zacks Rank #1, while SiteOne carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Silgan has a projected earnings growth rate of 28.7% for 2020. The company’s shares have gained 22% so far this year.
IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 37% in the past year.
SiteOne Landscape has an expected earnings growth rate of 15.4% for the current year. The stock has appreciated 41% year to date.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>