The Board of agricultural equipment maker
) has sanctioned the repurchase of shares worth up to $500
million. This is in addition to its prior repurchase
authorization of $50 million, initiated in July, 2012.
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Under the previous $50 million share repurchase program, AGCO has
repurchased around $19 million. Per the new program, buybacks
will be made in the open market at the company's discretion.
The new share repurchase program reflects AGCO's healthy cash
flow generation and long-term strength. It is also in sync with
AGCO's commitment to increase shareholder value through
continuous investment in business.
AGCO's earnings in third-quarter 2013 improved 32% year over year
to $1.27 per share. Revenues also increased 7.9% year over year
to $2.5 billion mainly driven by strong market demand in South
America and the Asia Pacific region.
AGCO is expected to benefit from strong free cash flow and its
focus on earnings growth. AGCO is also likely to gain from
regular upgrading of high-tech solutions for farmers, which will
provide a competitive edge, international expansion plans,
healthy farm income and increased demand for grain storage.
Last month, AGCO announced a new AgCommand integration along with
Raven Industries Inc.
) Slingshot system connected with the Fuse Technologies
initiative. This integration will offer growers a more seamless
experience by enabling their fleet and data management tools to
sync, via the AgCommand website.
However, robust demand, which was benefiting North America
results, may be unsustainable going forward. Furthermore, margin
headwinds remain in the form of increased engineering
expenditures to meet Tier 4 emission requirements.
Duluth, Ga.-based AGCO is a global leader involved in the design,
manufacture and distribution of agricultural machinery. AGCO
supports productive farming through a wide range of tractors,
combines, hay tools, sprayers, forage equipment, tillage
implements, grain storage and protein production systems, and
other related replacement parts.
AGCO currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the machinery-farming sector include
) with a Zacks Rank #1 (Strong Buy) and
Alamo Group, Inc.
) holding a Zacks Rank #2 (Buy).