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AGCO Corporation (AGCO): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

Posted
1/22/2014 7:00:00 AM
By: Zacks.com
Referenced Stocks:AGCO

Summary:
AGCO reported 17.7% year-over-year decline in second-quarter 2014 earnings to $1.77 per share. However, it surpassed the Zacks Consensus Estimate. AGCO trimmed its full-year 2014 earnings per share to $5.00. Net sales guidance has also been slashed in the range of $10.1 $10.3 billion. The company expects third-quarter 2014 earnings per share in the range of $0.75 to $0.80. AGCO believes that the global industry demand will soften in 2014. We believe 2014 will be a challenging year for the company due to the expected decline in demand across most of its markets. Negative impact of lower volumes and weaker product mix will also remain matters of concern. Thus, we maintain our Underperform recommendation on AGCO with a target price of $44.

Overview:

Established in 1990, AGCO Corporation is a leading manufacturer and distributor of agricultural equipment and related replacement parts. The company offers a full product line of farm equipment through a wide network of dealers and distributors in more than 140 countries across the world. AGCO Corporation's product line is categorized under five groups: tractors, replacement parts, combines, application equipment/sprayers, and other machinery.

The tractor business sells compact tractors (below 40 horsepower) typically used on small farms and in specialty agricultural industries such as dairies, landscaping, and residential areas. Moreover, AGCO Corporation provides utility tractors (40-100 horsepower) and high horsepower tractors (100-500 horsepower) used in medium-scale and large-scale farms. The replacement parts business supplies replacement parts for products sold under each of its brand names. The unit sells combines under the AGCO Allis, Gleaner, Massey Ferguson, Fendt, Valtra, and Challenger brand names. Under the application equipment/sprayers group, AGCO provides self-propelled three-and-four-wheeled vehicles and related equipment for use in the application of liquid and dry fertilizers and crop protection chemicals. The company also manufactures other related equipment, including vehicles used for waste application. Finally, within the machinery group, the company sells hay tools and forage equipment, primarily under the Hesston, Massey Ferguson, Challenger, Fendt, and AGCO Allis brand names. AGCO Corp. also distributes an array of implements, planters and other equipment for its product lines.


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