My Favourite Value Stock: AGCO Corporation
Thomas Clark • 28 Comments
Thomas Clark • 28 Comments
Mon, Jul. 25, 2:58 PM
- Deere (DE -2.8%) is downgraded to Underweight from Neutral with a $67 price target, cut from $76, at Piper Jaffray, which believes the current agricultural downturn will persist into 2017 for a fourth consecutive year.
- After speaking with growers, agronomists and dealers, Piper analyst Brett Wong says growing conditions have been extremely favorable and he foresees further pressure on corn prices after another strong year of U.S. corn yields, and grain prices also will remain weak, resulting in further declines in farm machinery demand.
- Farm machinery OEM stocks continue to trade at elevated multiples, expecting that this year will be trough demand with a recovery next year; Piper believes that overall global farm machinery demand will be down next year, which does not support current expectations for the stocks, and that estimates and valuation multiples are at risk.
- The firm also downgrades AGCO (AGCO -3%) and CNH Industrial (CNHI -2.6%) to Underweight from Neutral with respective $37 and $5 price targets.
Mon, Jun. 27, 3:19 PM
- AGCO (AGCO -5.9%) is downgraded to Underweight from Neutral with a $44 price target, cut from $47, at J.P. Morgan, citing weakening fundamentals in European agriculture and the rising dollar, which is expected to weigh on the company's North American business.
- JPM says AGCO has the greatest exposure to Europe in its machinery coverage, and notes that 60% of the company's EBIT comes from Europe, Africa and the Middle East, with another 16% from South America, where political and economic instability in Brazil continue to weigh on equipment demand.
- The firm also downgrades PACCAR (PCAR -6%) to Underweight from Neutral with a $47 price targets, lowered from $58, as the company's key end markets, especially the U.K., are likely to come under pressure in the near term, and North American truck fundamentals are expected to remain weak, with further production cuts expects in H2.
Fri, Jun. 3, 12:19 PM
- Deere (DE +1.6%) moves higher after Goldman Sachs upgrades shares to Buy from Neutral with a $105 price target, raised from $87, as the firm sees significant upside to the mid-cycle as crop inventories tighten.
- Analyst Jerry Revich says he now prefers the ag machinery group to truck and construction machinery, given that high horsepower farm equipment is at a 30-plus year trough and improving U.S. row crop commodity demand could outstrip supply in 2017-18 due to rising feed and export demand for the first time in the soft commodity inventory cycle.
- The firm raises DE's mid-cycle EPS estimate to $7.50 from $6.25, “driven by higher operating leverage due to R&D and overhead leverage.”
- Today's upgrade is the latest of a flurry of analyst love for DE in recent days (I, II).
- Other farm equipment stocks also are higher, including CNHI +4.5%, AGCO +1.7%, LNN +1.2%.
Tue, Apr. 19, 5:39 PM
Tue, Apr. 19, 2:49 PM
- Cliff Robbins of "friendly activist" hedge fund Blue Harbor tells CNBC his stake in AGCO Corporation (AGCO +3.4%) is up to 8%. It's an oligopoly-type business, and underlevered, he says, and can lift EPS up to $5-$6.
- Now read: AGCO Corp.: Cyclical Downturn In Farm Incomes Creates A Buying Opportunity
Wed, Apr. 13, 2:24 PM
- Investors should take profits on machinery stocks ahead of earnings, J.P. Morgan analysts say, as valuations are stretched after the sector outperformed the S&P in Q1 +17% vs. +1.3%, and investors likely will have little tolerance for weaker than expected performance.
- The firm suggests avoiding Deere (DE +1.9%), Agco (AGCO +3.5%) and CNH Industrial (CNHI +3%) on weaker fundamentals with downside risk to the market outlooks for each region, and Paccar (PCAR +2.9%) on weaker NAFTA HD truck demand vs. its guide for a 12% decline in U.S. and Canada retail sales.
- However, JPM likes Allison Transmission (ALSN +2.4%) heading into Q1 as it has underperformed peers while its exposure to HD Class 8 long haul is limited and MD orders are up 5% YTD.
- Rated Neutral CAT, MTW, JOY, NAV, TEX, MCRN, PH, KMT, ETN, ITW.
Dec. 15, 2015, 10:38 AM
- Comments from AGCO's (AGCO -6.3%) presentation this morning: FY16 production down 3%-5%; Sales down ~7% to ~$7B; FY16 adjusted EPS of ~$2.30 (consensus $2.92); Capex ~flat vs 2015; Free cash flow of $150M-$175M; Remainder of $500M buyback program to be completed in 2016.
Oct. 28, 2015, 9:16 AM
- Adjusted net income of $67.1M, or $0.77 per diluted share vs. $66.9M, or $0.71 in the same quarter a year ago.
- Sales by region: North America -3.7%; Europe/Africa/Middle East +3.7%; South America -23.8%; Asia/Pacific -3.8%.
- Share repurchase program reduced outstanding shares by 3.5M during the quarter.
- The company is increasing its full-year 2015 earnings per share guidance to $3.20 (from approximately $3.10), on revenues of $7.5B-$7.6B.
- AGCO +2.5% premarket
- Q3 results
Jul. 28, 2015, 10:02 AM
- AGCO (AGCO +3.3%) reports adjusted net income of $110M, or $1.25 per diluted share vs. $168.2M, or $1.77 in the same quarter a year ago.
- Revenue by region: North America -15.2%; Europe/Africa/Middle East -8.5%; South America -14.2%; Asia/Pacific -0.5%.
- Regional operating margin: North America 11.8%; Europe/Africa/Middle East 10.3%; South America 5.4%; Asia/Pacific -12.2%.
- Share repurchase program reduced outstanding shares by 0.9M during the quarter.
- Despite currency headwinds and weak demand, the company increased its forecast for 2015 EPS to approximately $3.10 (from $3.00), on sales of $7.7B-$7.9B.
- Q2 results
Jul. 27, 2015, 12:29 PM
- Goldman Sachs analyst Jerry Revich cuts his view on the machinery sector to Cautious from Neutral given a continued challenging environment, and downgrades Manitowoc (MTW -2.8%), Terex (TEX -3.6%) and Navistar (NAV -1.2%) to Sell from Neutral.
- Revich notes a challenging crane demand outlook due to a challenging outlook for commodity capital expenditure, a slowing infrastructure investment for commodity export regions, and high crane capital stock following a 10-plus year build-out cycle.
- On NAV, the company's debt, pension, warranty and truck trade-ins are "high and rising" amid softening used truck prices and U.S. trucking rates, which could push out its margin recovery story, Revich writes.
- Deere (DE -0.7%) and AGCO (AGCO -0.6%) are upgraded to Neutral from Sell even as the analyst is negative on the end market outlook for agriculture equipment.
Feb. 3, 2015, 8:07 AM
- AGCO (NYSE:AGCO): Q4 EPS of $1.18 beats by $0.51.
- Revenue of $2.48B (-13.3% Y/Y) beats by $60M.
- Shares +3.1% PM.
Oct. 7, 2014, 12:18 PM
- AGCO (AGCO -7.7%) shares fell as much as 9% after the manufacturer and distributor of agricultural equipment slashed its FQ3 and full-year earnings outlook, saying it expects weak demand across all regions.
- Deere (DE -1.9%), which caters to a similar clientele, also is falling, and Janney analyst Ryan Connors thinks AGCO’s news significantly increases the likelihood of further earnings downside for DE.
- While sentiment on agricultural machinery stocks already is very negative, ultimately the trajectory of commodity prices over the next 12 months will determine how the stocks perform, Janney says, which makes visibility on DE poor or even non-existent.
- Janney also downgrades AGCO to Neutral from Buy, and cuts its target price to $56 from $72.
- Also: Deere lower on BofA/Merrill downgrade
Oct. 2, 2014, 2:59 PM
- Fertilizer producers are mostly lower after Agrium (AGU -1.9%) announced weak guidance for H2 of its FY 2014: POT -2%, MOS -0.9%, OTCPK:YARIY -2.8%, IPI -2.3%, RNF -1.2%, but CF +2.4%.
- Canaccord and Piper Jaffray downwardly revised their 12-month price targets for the stock, by a respective 1.9% to $102 while reiterating a Buy rating and by 4.2% to $92 while maintaining a Neutral rating; however, BMO and RBC each reiterated their Outperform ratings on the stock with respective target prices of $99 and $115.
- Jim Cramer thinks AGU's woes could reverberate throughout the ag sector, at least in the near-term, with selling possibly spread to the likes of Monsanto (MON -0.4%), Syngenta (SYT +0.1%), Deere (DE +0.1%) and Agco (AGCO +1%).
Aug. 22, 2014, 8:27 AM
Dec. 17, 2013, 1:38 PM
- The announcement of a $500M share repurchase program isn't enough to save the day for AGCO (AGCO -4.4%) after management - at this morning's Investor Meeting - expects headwinds to hitting $6 per share in earnings this year, and sees $6/share as likely in 2014.
- Industry unit tractor sales are expected to fall 0-5% in North America, 5% in South America (amid an early end to Brazilian price supports), and 0-5% in Western Europe.
- Presentation slides set #1, set #2
- Deere (DE -0.6%) slips a bit, but AGCO has outperformed by more than 1,500 basis points this year.
Apr. 30, 2013, 12:06 PMAGCO trades 4.8% higher after its earnings beat on both the top and bottom line. Revenue grew 26%, 31%, and 10% in South America, Asia/Pacific, and North America respectively and the company said it exceeded its Q1 operating margin targets as well. Farm economics are "attractive," CEO Martin Richenhagen says, noting that strong farm income in 2012 is driving high levels of "industry demand in North America." In addition to outstripping analyst estimates, the company raised its FY13 EPS outlook to $5.50-5.70 from previous guidance of $5.10-5.35. (PR) | Apr. 30, 2013, 12:06 PM
AGCO Corp. engages in global manufacturing and distribution of agricultural equipment and related replacement parts. It designs, manufactures and distributes grain storage, handling equipment and protein production systems. The company also provides retail financing through its retail finance... More
Sector: Industrial Goods
Industry: Farm & Construction Machinery
Country: United States