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AGCO Corp (AGCO) Provides Update on Ransomware Cyber Attack

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AGCO Corporation (AGCO - Free Report) declared that it is on track to successfully restore systems and business operations impacted by the ransomware cyber-attack incident on May 5.

AGCO Corporation’s most affected production sites and parts operations restarted operational activities. With rest of the sites likely to start operations through this week, the company assured that all factories and parts operations will be functional by the end of this week.

AGCO Corporation reported data loss due to the ransomware cyber attack. Although the leading farm equipment maker does not have retail operations, it does not possess privacy-protected consumer data. Yet, AGCO is evaluating the possibility and consequences of the data loss. The company expects to diminish the production loss from the ransomware cyber-attack by increasing production over the remainder of the current year.

Earlier this month, AGCO Corporation reported first-quarter 2022 results. Adjusted earnings and revenues in the quarter surpassed the Zacks Consensus Estimate and increased year over year.

The company expects current year net sales between $12.5 billion and $12.7 billion, suggesting increased sales volumes and benefits from the pricing. Gross and operating margins are expected to be higher than the 2021 levels, owing to higher sales and production volumes and the company’s pricing actions to mitigate material and labor cost inflation. The improved profitability will likely support incremental investments in engineering and other technology to advance AGCO’s precision agriculture and digital initiatives. Considering these, management projects earnings per share for the current year to be between $11.70 and $11.90.

Despite higher farm input costs, elevated agricultural commodity prices and their impact on farm income will drive demand for agricultural equipment, encouraging farmers to upgrade and replace their aging fleets. This, in turn, will drive AGCO’s top line. These factors will likely drive higher retail industry demand across all three major regions in 2022. Given favorable market demand and year-over-year strong order levels, AGCO continues to witness a positive market response to its technology-focused products, which are fueling sales growth and margin expansion across all regions.

AGCO continues to invest in products, premium technology and smart farming solutions to improve distribution, enhance digital capabilities, expand product lines and improve factory productivity. These improvements will support AGCO’s investments in precision agriculture and digital initiatives, driving higher sales growth and margin. In 2021, AGCO launched 23 precision agriculture-enabled products.

However, AGCO continues to witness significant component shortages due to supply chain tightness, which is impacting production levels and shipments of units. It also contributed to labor inefficiencies and resulted in higher inventory levels. The company bears the brunt of supply chain and logistics challenges and material and freight cost inflation. These factors are likely to impact the company’s production and revenues and its Precision Planting sales.

Price Performance

AGCO Corporation’s shares have declined 13.2% in the past year compared with the industry’s loss of 2.8%.

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Zacks Rank and Stocks to Consider

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

Some better-ranked stocks in the Industrial Products sector are Graphic Packaging Holding Company (GPK - Free Report) , Packaging Corporation of America (PKG - Free Report) and Avery Dennison Corporation (AVY - Free Report) .  While GPK flaunts a Zacks Rank #1 (Strong Buy), PKG and AVY carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Graphic Packaging has an estimated earnings growth rate of 86.8% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 7.6%.

Graphic Packaging pulled off a trailing four-quarter earnings surprise of 7.2%, on average. The company’s shares have appreciated 14.8% in a year.

Packaging Corporation has an expected earnings growth rate of 16.2% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 4.2% in the past 60 days.

PKG has a trailing four-quarter earnings surprise of 19.6%, on average. Packaging Corporation’s shares have gained 4% in the past year.

Avery Dennison has a projected earnings growth rate of 8.9% for the current year. The Zacks Consensus Estimate for 2022 earnings has moved north by 0.8% in the past 60 days.

Avery Dennison delivered a trailing four-quarter earnings surprise of 5.3%, on average. AVY has long term earnings growth rate of 7%.