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

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

Summary:
AGCO Corporation reported a 16% year-over-year decline in its fourth-quarter 2014 earnings to 1.18 per share due to significant production cuts and negative effect of currency translation. AGCO guided full year 2015 net sales in the range of $8.1 to $8.3 billion and earnings per share of approximately $3.00, reflecting the impact of softer market conditions, unfavorable currency translation and lower commodity prices. Weaker sales mix and production volumes will also affect growth in the near term. However, AGCO is poised to benefit from investment in new product development, distribution enhancements and productivity improvements. Additionally, focus on restructuring and cost reduction initiatives will drive growth. Thus, we are reiterating our Neutral recommendation on AGCO with a target price of $51.

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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