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AGCO Corp (AGCO) Teams Up With Faromatics, Boosts Animal Welfare

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AGCO Corporation (AGCO - Free Report) has joined forces with a precision livestock farming company — Farm Robotics and Automation S.L. (Faromatics) — in an effort to deliver smart farming solutions for livestock producers.

Faromatics is the inventor of ChickenBoy, the world’s first roof-suspended robot that monitors broiler chicken, and helps farmers enhance their animal welfare and farm productivity. The AI-enabled robot uses a set of sensors to measure vital parameters like thermal sensation, air quality, light and sound, while also detecting risks related to animal health and farm equipment.

Favorable market demand and positive market response to its technology-focused products are fueling AGCO’s sales growth and margin expansion across all regions. The company continues to invest in products, premium technology and smart farming solutions to improve distribution and enhance its digital capabilities, in order to strengthen product offerings.

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. The company also purchased the forage division of the Lely Group, which has significantly enhanced its hay and forage product line in Europe, and will keep driving growth in this market.

Recently, the USDA (U.S. Department of Agriculture) released the 2021 farm income forecast, wherein the net farm income is anticipated to increase 19.5% from 2020 to $113 billion, suggesting the highest level since 2013. This upbeat projection is primarily aided by the higher commodity prices on account of the tightening global stocks and strong import demand from China through the year. In the inflation-adjusted 2021 dollars, the net farm income is projected to be up 15.3% in 2021. Increased commodity prices will drive farm income, encouraging farmers to boost spending on agricultural equipment. This, in turn, will drive AGCO’s top-line performance.

AGCO expects to register sales and earnings growth in the current year on the improving farm prospects and solid order trends. During the second-quarter earnings call, AGCO predicted net sales for the ongoing year to lie between $11.3 billion and $11.5 billion, up from the prior forecast of $10.6 billion to $10.8 billion. It estimated adjusted earnings per share for 2021 at $9.50, up from prior guided range of $8.40 to $8.60.

Share Price Performance

So far this year, AGCO’s stock has appreciated 28.7% compared with the industry’s growth of 30.8%.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank & Stocks to Consider

AGCO currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Industrial Products sector include Encore Wire Corporation (WIRE - Free Report) , Deere & Company (DE - Free Report) and Lincoln Electric Holdings, Inc. (LECO - Free Report) . While Encore Wire sports a Zacks Rank #1 (Strong Buy), Deere & Lincoln Electric carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Encore Wire has a projected earnings growth rate of 332.6% for fiscal 2021. So far this year, the company’s shares have gained 45%.

Deere has an estimated earnings growth rate of 117.5% for fiscal 2021. The company’s shares have rallied 36.3%, so far this year.

Lincoln Electric has an expected earnings growth rate of 45.1% for 2021. The stock has appreciated 22%, year to date.