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Agco (AGCO) Moves 3.3% Higher: Will This Strength Last?

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Agco (AGCO - Free Report) shares soared 3.3% in the last trading session to close at $131.53. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 8.2% loss over the past four weeks.

AGCO’s shares have gained following Moody’s announcement that it has completed a periodic review of rating for the company. Moody’s Baa3 rating on AGCO highlights its strong position in core markets in Europe, and long-term agriculture industry fundamentals characterized by growing global population, increased consumption of protein and higher demand for larger and more technically sophisticated farm equipment. Sound liquidity and the joint ventures with Rabobank also support the rating. Per the agency, even though AGCO’s margins have improved, they still lag global competitors and similarly rated peers. However, this margin weakness is balanced by AGCO’s conservative balance sheet and prudent financial policy.

This farm equipment maker is expected to post quarterly earnings of $2.21 per share in its upcoming report, which represents a year-over-year change of +99.1%. Revenues are expected to be $2.75 billion, up 36.9% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Agco, the consensus EPS estimate for the quarter has been revised 1.5% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on AGCO going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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