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AGCO Corp's (AGCO) Q2 Earnings & Sales Top Estimates, Shares Up

AGCO Corporation’s AGCO shares have gained 5% since the company reported better-than-expected second-quarter 2021 earnings. The company delivered adjusted earnings per share of $2.88 compared with the prior-year quarter’s $1.11 per share. The reported figure beat the Zacks Consensus Estimate of $2.17. The quarterly results reflect strong margin performance across all segments.

Including one-time items, AGCO reported earnings per share of $3.73 compared with the year-ago quarter’s 93 cents.

Revenues increased 43.5% year over year to $2,879 million during the June-end quarter. The top-line figure also beat the Zacks Consensus Estimate of $2,742 million. Excluding the favorable currency-translation impact of 8.9%, net sales were up 34.6% year over year.

Operational Update

Cost of sales grew 39% year over year to $2,187 million during the second quarter. Gross profit climbed 60% year over year to $692 million during the reported quarter. Gross margin came in at 24% compared with the prior-year period’s 21.5%.

Selling, general and administrative expenses flared up to $276 million from the year-ago quarter’s $219 million. Adjusted income from operations surged 143% year over year to $295 million. Consequently, operating margin came in at 10.2% compared with the year-earlier quarter’s 6%.

AGCO Corporation Price, Consensus and EPS Surprise

AGCO Corporation Price, Consensus and EPS Surprise

AGCO Corporation price-consensus-eps-surprise-chart | AGCO Corporation Quote

Segment Performance

Sales in the North America segment shot up 32.2% year over year to $735 million during the April-June period. The segment reported an operating income of $104 million compared with the prior-year quarter’s $65 million.

Sales in the South America segment climbed 55.9% year over year to $278 million. The segment reported an operating profit of $23.1 million compared with the prior-year quarter’s $5.5 million.

The EME (Europe/Middle East) segment’s sales came in at $1,635 million compared with the $1,125 million reported in the year-ago period. The EME’s operating income surged 121.4% year over year to $202 million.

Sales in the Asia/Pacific segment jumped 56.7% year on year to $231 million. The segment registered an operating profit of $27 million compared with the year-ago quarter’s $14 million.

Financial Update

AGCO reported cash and cash equivalents of $500.2 million as of Jun 30, 2021, down from $1,119.1 million as of Dec 31, 2020. The company utilized $125 million cash in operating activities in the six-month period ended Jun 30, 2021 compared with the usage of $222 million in the year-ago comparable period.

Guidance

The company expects net sales for the ongoing year to lie between $11.3 billion and $11.5 billion, suggesting improved sales volumes, pricing and positive impacts of foreign-currency translation. Gross and operating margins are projected to be higher than the 2020 levels, owing to higher sales and production volumes as well as the company’s cost-reduction initiatives. The improved profitability is likely to support incremental investments in engineering and other technology, in order to advance AGCO’s precision agriculture and digital initiatives. Considering these, management projects adjusted earnings per share for the current year at $9.50.

Share Price Performance

Over the past year, AGCO’s stock has appreciated 101.8%, outperforming the industry’s growth of 98.5%.

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Zacks Rank & Stocks to Consider

AGCO currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Industrial Products sector include Greif, Inc. GEF, Lindsay Corp. LNN and Pentair plc PNR. All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Greif has an anticipated earnings growth rate of 47.2% for fiscal 2021. The company’s shares have gained 29.9%, in the past year.

Lindsay has an estimated earnings growth rate of 1% for the ongoing fiscal year. In a year's time, the company’s shares have rallied 22.3%.

Pentair has a projected earnings growth rate of 26% for 2021. The stock has appreciated 36.7%, over the past year.


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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 Nasdaq, Inc.

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