Back to top

Image: Bigstock

Should Value Investors Buy AGCO (AGCO) Stock?

Read MoreHide Full Article

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is AGCO (AGCO - Free Report) . AGCO is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 8.74 right now. For comparison, its industry sports an average P/E of 11.94. AGCO's Forward P/E has been as high as 12.20 and as low as 6.88, with a median of 9.64, all within the past year.

Investors will also notice that AGCO has a PEG ratio of 0.83. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AGCO's PEG compares to its industry's average PEG of 1. Over the past 52 weeks, AGCO's PEG has been as high as 1.23 and as low as 0.68, with a median of 0.96.

We should also highlight that AGCO has a P/B ratio of 2.29. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 4.14. Within the past 52 weeks, AGCO's P/B has been as high as 3.23 and as low as 1.97, with a median of 2.57.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AGCO has a P/S ratio of 0.74. This compares to its industry's average P/S of 1.06.

Finally, investors will want to recognize that AGCO has a P/CF ratio of 7.70. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. AGCO's P/CF compares to its industry's average P/CF of 9.73. Over the past year, AGCO's P/CF has been as high as 9.50 and as low as 6.18, with a median of 8.14.

These are only a few of the key metrics included in AGCO's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, AGCO looks like an impressive value stock at the moment.

See More Zacks Research for These Tickers

Normally $25 each - click below to receive one report FREE:

AGCO Corporation (AGCO) - free report >>

Published in