AGCO Corporation (NYSE:AGCO) came through with another blowout quarter Tuesday. This marks at least the 13th straight quarter the company has beat estimates, the majority of times by a significant amount like today. Based on the report and the stock's fundamentals, the stock would appear to have significantly more upside.
Key earnings highlights for AGCO:
- The company posted earnings of $1.21 a share, 35 cents over consensus estimates.
- Revenues improved a little over 26% Y/Y to $2.27B, over $200m over estimates.
- Raises FY2012 guidance to $5.50 a share in earnings, significantly over the consensus range of $5.00 to $5.07.
- Gives revenue guidance $300mm to $600mm above the consensus sales estimate of $9.9B for FY2012.
- Surprisingly, states strongest growth is coming from Western and Eastern Europe.
4 reasons AGCO is still a buy at under $50:
- Consensus estimates for FY2012 and FY2013 had already risen over the prior three months. Look for these estimates to be taken up smartly given the earnings beat and guidance.
- The stock is now selling around 9 times the new guidance for $5.50 EPS in FY2012, this is significantly below its five year average (15.8).
- The company more than doubled its operating cash flow from FY2009 to FY2011. The stock sells currently for less than 7 times OCF.
- The stock is a solid Ag play given its five year projected PEG that is under 1 (.68) and it goes for about 50% of annual revenues.
Note: AGCO's blowout earnings and revenues should bode well for its competitor Deere (NYSE:DE) when it reports on May 16th.