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AGCO (AGCO) Beats Q4 Earnings & Revenue; Outlook Positive
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AGCO Corporation (AGCO - Free Report) reported a year-over-year gain of 5% in its fourth-quarter 2016 adjusted earnings to 84 cents per share. Earnings comfortably beat the Zacks Consensus Estimate of 71 cents.
Including restructuring and other infrequent expenses, earnings in the quarter were 77 cents per share compared with 73 cents in the prior-year quarter.
AGCO reported revenues of $2.09 billion, a 6.9% increase from $1.96 billion in the year-ago quarter. Further, revenues surpassed the Zacks Consensus Estimate of $1.95 billion. Excluding unfavorable currency translation impacts of approximately 1.8%, net sales climbed approximately 8.7% year over year.
AGCO Corporation Price, Consensus and EPS Surprise
Cost of sales went up 7% to $1.67 billion from $1.56 billion in the year-ago quarter. Gross profit was $420 million in the quarter, up 5.8% from $397 million in the prior-year quarter. Gross margin was 20.1%, which reflects a year-over-year contraction of 20 basis points (bps).
Selling, general and administrative expenses were up 1.2% year over year to $224.8 million. Adjusted income from operations increased 5.2% year over year to $97.8 million. Consequently, operating margin remained flat year over year at 4.7%.
Segment Performance
Sales at the North America segment increased 3% year over year to $447.4 million in the quarter. The segment posted loss of $4.9 million, compared to a profit of $7 million in the year-ago quarter.
Sales at the South America segment surged 63.6% year over year to $308 million. The segment reported operating income of $13.6 million, compared to an operating loss of $4.4 million in the year-earlier quarter.
The EAME (Europe/ Africa/ Middle East) segment’s sales were $1,187 million, down 2% from the year-ago quarter. EAME’s operating income dipped 5.5% to $125.8 million from $132.7 million in the prior-year quarter.
Sales at the Asia/Pacific segment jumped 21.8% year over year to $151 million from $124 million a year ago. The segment reported an income of $7.5 million, as against the year-ago quarter loss of $2.2 million.
Financial Update
AGCO reported cash and cash equivalents of $429.7 million at the end of 2016, up from $426.7 million at 2015 end. The company recorded cash flow from operations of $369.5 million in 2016 compared with $524.2 million in the year-ago period.
During the year ended Dec 31, 2016, AGCO entered into accelerated share repurchase agreements with a financial institution to repurchase an aggregate of $212.5 million of shares of its common stock. AGCO received approximately 4,005,643 shares during the year ended Dec 31, 2016 related to the ASRs.
2016 Performance
AGCO posted earnings of $2.47 per share for 2016, which plunged 23.8% year over year. Earnings missed the Zacks Consensus Estimate of $2.34. Revenues for full-year 2016 edged down 0.8% year over year to $7.4 billion from $7.5 billion in 2015. Revenues beat the Zacks Consensus Estimate of $7.3 billion.
Guidance
AGCO guided its net sales to be approximately $7.4 billion for 2017. Gross and operating margins are likely to improve from 2016 levels, reflecting the positive impact of pricing and cost-reduction efforts. Based on these assumptions, earnings per share for 2017 are targeted to be approximately $2.50.
In 2017, AGCO anticipates that industry conditions will remain near the bottom of the agricultural equipment cycle in key markets. The company remains focused on cost and expense reduction through globalizing processes, reducing complexity and better leveraging scale. In addition, AGCO will continue to make long-term investments to raise the efficiency of factories, improve service levels and strengthen product offering. However, softer industry demand across North America and Europe will hamper its results.
Share Price Performance
In the last one year, AGCO has underperformed the Zacks classified Machinery Farm sub-industry with respect to price performance. The stock gained around 37.9%, while the industry rose 38.8% over the same time frame.
Zacks Rank & Key Picks
AGCO currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same sector are ABB Ltd , Altra Industrial Motion Corp. and Apogee Enterprises, Inc. (APOG - Free Report) .
Altra Industrial Motion also boasts a Zacks Rank #1 and has delivered an average positive earnings surprise of 8.06% for the trailing four quarters. Apogee, another Zacks Rank #1 stock, has an average positive earnings surprise of 13.24% for the past four quarters.
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AGCO (AGCO) Beats Q4 Earnings & Revenue; Outlook Positive
AGCO Corporation (AGCO - Free Report) reported a year-over-year gain of 5% in its fourth-quarter 2016 adjusted earnings to 84 cents per share. Earnings comfortably beat the Zacks Consensus Estimate of 71 cents.
Including restructuring and other infrequent expenses, earnings in the quarter were 77 cents per share compared with 73 cents in the prior-year quarter.
AGCO reported revenues of $2.09 billion, a 6.9% increase from $1.96 billion in the year-ago quarter. Further, revenues surpassed the Zacks Consensus Estimate of $1.95 billion. Excluding unfavorable currency translation impacts of approximately 1.8%, net sales climbed approximately 8.7% year over year.
AGCO Corporation Price, Consensus and EPS Surprise
AGCO Corporation Price, Consensus and EPS Surprise | AGCO Corporation Quote
Operational Update
Cost of sales went up 7% to $1.67 billion from $1.56 billion in the year-ago quarter. Gross profit was $420 million in the quarter, up 5.8% from $397 million in the prior-year quarter. Gross margin was 20.1%, which reflects a year-over-year contraction of 20 basis points (bps).
Selling, general and administrative expenses were up 1.2% year over year to $224.8 million. Adjusted income from operations increased 5.2% year over year to $97.8 million. Consequently, operating margin remained flat year over year at 4.7%.
Segment Performance
Sales at the North America segment increased 3% year over year to $447.4 million in the quarter. The segment posted loss of $4.9 million, compared to a profit of $7 million in the year-ago quarter.
Sales at the South America segment surged 63.6% year over year to $308 million. The segment reported operating income of $13.6 million, compared to an operating loss of $4.4 million in the year-earlier quarter.
The EAME (Europe/ Africa/ Middle East) segment’s sales were $1,187 million, down 2% from the year-ago quarter. EAME’s operating income dipped 5.5% to $125.8 million from $132.7 million in the prior-year quarter.
Sales at the Asia/Pacific segment jumped 21.8% year over year to $151 million from $124 million a year ago. The segment reported an income of $7.5 million, as against the year-ago quarter loss of $2.2 million.
Financial Update
AGCO reported cash and cash equivalents of $429.7 million at the end of 2016, up from $426.7 million at 2015 end. The company recorded cash flow from operations of $369.5 million in 2016 compared with $524.2 million in the year-ago period.
During the year ended Dec 31, 2016, AGCO entered into accelerated share repurchase agreements with a financial institution to repurchase an aggregate of $212.5 million of shares of its common stock. AGCO received approximately 4,005,643 shares during the year ended Dec 31, 2016 related to the ASRs.
2016 Performance
AGCO posted earnings of $2.47 per share for 2016, which plunged 23.8% year over year. Earnings missed the Zacks Consensus Estimate of $2.34. Revenues for full-year 2016 edged down 0.8% year over year to $7.4 billion from $7.5 billion in 2015. Revenues beat the Zacks Consensus Estimate of $7.3 billion.
Guidance
AGCO guided its net sales to be approximately $7.4 billion for 2017. Gross and operating margins are likely to improve from 2016 levels, reflecting the positive impact of pricing and cost-reduction efforts. Based on these assumptions, earnings per share for 2017 are targeted to be approximately $2.50.
In 2017, AGCO anticipates that industry conditions will remain near the bottom of the agricultural equipment cycle in key markets. The company remains focused on cost and expense reduction through globalizing processes, reducing complexity and better leveraging scale. In addition, AGCO will continue to make long-term investments to raise the efficiency of factories, improve service levels and strengthen product offering. However, softer industry demand across North America and Europe will hamper its results.
Share Price Performance
In the last one year, AGCO has underperformed the Zacks classified Machinery Farm sub-industry with respect to price performance. The stock gained around 37.9%, while the industry rose 38.8% over the same time frame.
Zacks Rank & Key Picks
AGCO currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same sector are ABB Ltd , Altra Industrial Motion Corp. and Apogee Enterprises, Inc. (APOG - Free Report) .
ABB Ltd has delivered an average positive earnings surprise of 23.50% in the last four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Altra Industrial Motion also boasts a Zacks Rank #1 and has delivered an average positive earnings surprise of 8.06% for the trailing four quarters. Apogee, another Zacks Rank #1 stock, has an average positive earnings surprise of 13.24% for the past four quarters.
Just Released – Driverless Cars: Your Roadmap to Mega-Profits Today
In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>