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Are Investors Undervaluing Agco (AGCO) Right Now?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 stock to keep an eye on is Agco (AGCO - Free Report) . AGCO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 12.90 right now. For comparison, its industry sports an average P/E of 13.81. AGCO's Forward P/E has been as high as 15.49 and as low as 10.99, with a median of 13.59, all within the past year.

AGCO is also sporting a PEG ratio of 0.96. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. AGCO's PEG compares to its industry's average PEG of 1.73. Over the past 52 weeks, AGCO's PEG has been as high as 1.15 and as low as 0.70, with a median of 0.91.

Investors should also recognize that AGCO has a P/B ratio of 1.69. 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. AGCO's current P/B looks attractive when compared to its industry's average P/B of 2.96. Over the past 12 months, AGCO's P/B has been as high as 1.98 and as low as 1.33, with a median of 1.68.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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 0.57. This compares to its industry's average P/S of 0.91.

These are just a handful of the figures considered in Agco's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that AGCO is an impressive value stock right now.


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