On Dec 25, Zacks Investment Research downgraded
), a manufacturer of agricultural equipment, to a Zacks Rank #5
AGCO CORP (AGCO): Free Stock Analysis Report
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Why the Downgrade?
On Oct 29, AGCO reported its third-quarter 2013 financial
results. Even though earnings improved 32% year over year to
$1.27 per share, it missed the Zacks Consensus Estimate of $1.29.
Revenues in the reported quarter increased 7.9% year over year to
$2.5 billion, mainly driven by strong market demand in South
America and the Asia Pacific region.
Despite improved results, AGCO reiterated its full-year 2013
earnings per share guidance of $6.00. The company also maintained
its full-year revenue outlook at $10.8-$11 billion. Strong growth
in South America and modest performance in North America is
expected to be offset by moderate declines in Western Europe.
Global industry demand is estimated to be relatively flat in 2013
compared to 2012.
AGCO's North American operating performance has been
higher-than-expected year to date. However, the peak demand
conditions that benefited results in North America may be
unsustainable going forward.
In addition, demand in Western Europe is predicted to be weak,
particularly in the U.K. and Central and Eastern Europe. However,
solid demand across France and Germany is anticipated to mitigate
some of the weakness in other regions.
AGCO's purchasing actions, factory efficiency projects and new
product developments are all contributing to its improved
margins. However, margins will be under pressure from lower crop
prices and higher engineering expenditures as the company strives
to meet Tier 4 emission requirements.
Following the third-quarter earnings announcement, AGCO's Zacks
Consensus Estimate for 2013 has gone down 2.6% to $5.97 per
share. Likewise, the Zacks Consensus Estimate for 2014 dropped
5.6% to $5.76.
Other Stocks to Consider
Other machinery makers with favorable Zacks Rank are
) both with a Zacks Rank #1 (Strong Buy), and
Alamo Group, Inc.
) carrying a Zacks Rank #2 (Buy).