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Agco (AGCO) Down 7.3% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Agco (AGCO - Free Report) . Shares have lost about 7.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Agco due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
AGCO Corporation delivered adjusted earnings per share (EPS) of $2.39 in first-quarter 2022 compared with the prior-year quarter’s $2 per share. The reported figure beat the Zacks Consensus Estimate of $1.88. The quarterly results reflect favorable farm fundamentals, robust global demand and price increase actions.
Including one-time items, AGCO posted EPS of $2.03 compared with the year-ago quarter’s $1.99.
Revenues increased 13% year over year to $2,686 million during the March-end quarter. The top line surpassed the Zacks Consensus Estimate of $2,640 million. Excluding the unfavorable currency-translation impact of 5%, net sales were up 18% year over year.
Operational Update
Cost of sales increased 14% year over year to $2,054 million during the first quarter. Gross profit increased 11% year over year to $631 million during the reported quarter. The gross margin came in at 23.4% compared with the prior-year quarter’s 23.9%.
Selling, general and administrative expenses came in at $271 million compared with the year-ago quarter’s $261 million. Adjusted income from operations was up 24% year over year to $243 million. Consequently, the operating margin came in at 9% compared with the year-earlier quarter’s 8%.
Segment Performance
Sales in the North America segment were up 15% year over year to $701 million during the January-March period. The segment reported an operating income of $55 million compared with the prior-year quarter’s $75 million.
Sales in the South America segment increased 48% year over year to $356 million. The segment reported an operating profit of $46 million compared with the prior-year quarter’s $16 million.
The EME (Europe/Middle East) segment’s sales came in at $1,403 million compared with the $1,327 million reported in the year-ago period. The EME’s operating income came in at $162 million compared with the year-ago quarter’s income of $144 million.
Sales in the Asia/Pacific segment were up 13% year on year to $225 million. The segment registered an operating profit of $34 million compared with the year-ago quarter’s $21 million.
Financial Update
AGCO Corporation reported cash and cash equivalents of $656 million at the end of the first quarter, down from $889 million at the 2021-end. The company utilized $577 million cash in operating activities in the first quarter compared with $315 million in the prior-year quarter.
Guidance
AGCO Corporation expects net sales for 2022 between $12.5 billion and $12.7 billion, suggesting increased sales volumes and pricing, partly offset by the negative impact of foreign currency translation. Gross and operating margins are expected to be higher than the 2021 levels, owing to higher sales and production volumes as well as the company’s pricing actions to mitigate material and labor cost inflation. The improved profitability is likely to support incremental investments in engineering and other technology to advance AGCO’s precision agriculture and digital initiatives. Considering these, management projects EPS for the current year is expected to be between $11.70 and $11.90.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -6.95% due to these changes.
VGM Scores
At this time, Agco has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Agco has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Agco (AGCO) Down 7.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Agco (AGCO - Free Report) . Shares have lost about 7.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Agco due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
AGCO Corporation delivered adjusted earnings per share (EPS) of $2.39 in first-quarter 2022 compared with the prior-year quarter’s $2 per share. The reported figure beat the Zacks Consensus Estimate of $1.88. The quarterly results reflect favorable farm fundamentals, robust global demand and price increase actions.
Including one-time items, AGCO posted EPS of $2.03 compared with the year-ago quarter’s $1.99.
Revenues increased 13% year over year to $2,686 million during the March-end quarter. The top line surpassed the Zacks Consensus Estimate of $2,640 million. Excluding the unfavorable currency-translation impact of 5%, net sales were up 18% year over year.
Operational Update
Cost of sales increased 14% year over year to $2,054 million during the first quarter. Gross profit increased 11% year over year to $631 million during the reported quarter. The gross margin came in at 23.4% compared with the prior-year quarter’s 23.9%.
Selling, general and administrative expenses came in at $271 million compared with the year-ago quarter’s $261 million. Adjusted income from operations was up 24% year over year to $243 million. Consequently, the operating margin came in at 9% compared with the year-earlier quarter’s 8%.
Segment Performance
Sales in the North America segment were up 15% year over year to $701 million during the January-March period. The segment reported an operating income of $55 million compared with the prior-year quarter’s $75 million.
Sales in the South America segment increased 48% year over year to $356 million. The segment reported an operating profit of $46 million compared with the prior-year quarter’s $16 million.
The EME (Europe/Middle East) segment’s sales came in at $1,403 million compared with the $1,327 million reported in the year-ago period. The EME’s operating income came in at $162 million compared with the year-ago quarter’s income of $144 million.
Sales in the Asia/Pacific segment were up 13% year on year to $225 million. The segment registered an operating profit of $34 million compared with the year-ago quarter’s $21 million.
Financial Update
AGCO Corporation reported cash and cash equivalents of $656 million at the end of the first quarter, down from $889 million at the 2021-end. The company utilized $577 million cash in operating activities in the first quarter compared with $315 million in the prior-year quarter.
Guidance
AGCO Corporation expects net sales for 2022 between $12.5 billion and $12.7 billion, suggesting increased sales volumes and pricing, partly offset by the negative impact of foreign currency translation. Gross and operating margins are expected to be higher than the 2021 levels, owing to higher sales and production volumes as well as the company’s pricing actions to mitigate material and labor cost inflation. The improved profitability is likely to support incremental investments in engineering and other technology to advance AGCO’s precision agriculture and digital initiatives. Considering these, management projects EPS for the current year is expected to be between $11.70 and $11.90.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -6.95% due to these changes.
VGM Scores
At this time, Agco has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Agco has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.