AGCO Corp. (AGCO) recently hit a new all-time high of $51.51 after rallying for most of the last 5 months on higher agriculture prices. With a compelling valuation and bullish growth projection, this Zacks #1 rank stock has harvested plenty of momentum for itself.
Company Description
AGCO Corp. manufactures and sells agricultural equipment like tractors, combines, sprayers and hay tools worldwide. The company was founded in 1990 and has a market cap of $4.74 billion.
Agriculture is hot right now, with key crops like corn, beans and wheat jumping higher on surging demand from emerging markets across the world. That trend lifted AGCO to strong Q3 results on October 26 that easily beat expectations.
Third-Quarter Results
Revenue for the period was up 19% from last year to $1.7 billion. Earnings also came in strong at 66 cents, 37.5% ahead of the Zacks Consensus Estimate, where the company now has an average earnings surprise of 97% over the last four years.
The company continues to see strong results in its international operations, with its South American sales up 39% from last year. North America was also strong, with sales up 26.5% from last year.
Although it’s European/Africa/Middle East segment, comprising 42% of total revenue, has showed signs of stability, the region remains a bit of a wildcard as the EU struggle with its debt problems.
Balance Sheet
AGCO also continues to enjoy a strong financial profile, with cash and equivalents up $236 million from last year to $459 million while its total debt fell $42 million to $608 million.
Estimates
We saw some slight pressure in the current-year estimate on concern over the company’s European exposure, down 2 cents to $2.19. The next-year estimate is pegged at $2.90, up 13 cents from last month to $2.90, a bullish 32% growth projection.
Valuation
But in spite of the gains, AGCO still has value, trading with a PEG ratio (PE/growth) of .72, well below the traditional value benchmark of 1.
12-Month Chart
On the chart, shares have been rallying since early July, recently hitting a new all-time high at $51.51. Look for support from the trend line on any weakness, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
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