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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
Referenced Stocks: AGCO

In third-quarter 2014, AGCO's earnings declined 44% year-over-year to $0.71 per share, even though it surpassed the Zacks Consensus Estimate of $0.63. For 2014, the company expects GSI sales to be up approximately 10%. Moreover, AGCO remains committed to strategic investments in new product development, distribution enhancement and productivity improvement. The company is also focused on increasing shareholder value through share repurchases. However, AGCO anticipates decline across all major global agricultural markets, particularly in the row crop segment in 2014. Moreover, FINAME funding interruptions earlier this year, a weaker sugar sector and volatile foreign currency will hurt growth. Thus, we are upgrading our recommendation on AGCO from Underperform to Neutral with a target price of $48.


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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