AGCO's Board Clears $500M Share Buyback - Analyst Blog


The Board of agricultural equipment maker AGCO Corporation ( AGCO ) 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.

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. 's ( RAVN ) 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 Kubota Corporation ( KUBTY ) with a Zacks Rank #1 (Strong Buy) and Alamo Group, Inc. ( ALG ) holding a Zacks Rank #2 (Buy).

AGCO CORP (AGCO): Free Stock Analysis Report

ALAMO GROUP INC (ALG): Free Stock Analysis Report


RAVEN INDS INC (RAVN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AGCO , ALG , KUBTY , RAVN

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