AGCO Corporation (AGCO) Buy or Sell Stock Guide

Last updated: Apr 12, '19

Are you looking for the analysis of AGCO Corporation (AGCO) stock? Are you wondering what the bulls and the bears say about it?

If so, you came to the right place. In this stock guide, we will share with you 8 reasons to buy and 7 reasons to sell AGCO stock. You’ll get a perspective on what the bulls and the bears say about it.

The analysis below may be also helpful to you if you have any of the following questions about AGCO stock:

  • Is AGCO a buy or a sell?
  • Should I sell or hold AGCO stock today?
  • Is AGCO a good buy / investment?
  • What are AGCO analyst opinions, recommendations and ratings?

Let’s start with the bull case. Here are the reasons to buy AGCO stock:

1. Although Agco's market share trails Deere and CNH by a substantial margin in North America, it holds 50% of the Brazilian market.

2. As Agco has refocused its attention on internal profitability and working capital management, returns on invested capital have improved to more than 13% during the past five years versus only 10% over the prior five years.

3. The consolidation of low-horsepower tractor manufacturing in China is expected to generate $50 million-$70 million of annual savings over the long term.

4. AGCO profitability is improving. The YoY profit margin change was 0.81pp. See AGCO profitability chart.

5. AGCO forward dividend yield is 0.86%, higher than the industry (0.66%) and sector (0.45%) forward dividend yields. See AGCO forward dividend chart.

6. AGCO forward P/E ratio is 13.14, and it’s low compared to its industry peers’ P/E ratios. See AGCO forward P/E ratio chart.

7. AGCO Price/Sales ratio is 0.58, and it’s low compared to its industry peers’ P/S ratios. See AGCO forward Price/Sales ratio chart.

8. AGCO PEG ratio (P/E adjusted for growth) is 0.92, and it’s low compared to its industry peers’ PEG ratios. See AGCO PEG chart.

Now that you understand the bull case, let’s look at the reasons to sell AGCO stock (i.e., the bear case):

1. New Western European engines may face difficulty getting traction in Eastern Europe because of more stringent fuel requirements; even as current economic headwinds abate, Western Europe could face used-equipment oversupply.

2. Agco is working to reduce its North American dealer footprint to create more exclusive arrangements, but the process may take several years.

3. Agco's R&D spending has increased faster than Deere's and CNH's during the past five years but still trails as a percentage of sales. Agco's R&D cost growth may continue to outpace revenue gains as it fights to be relevant.

4. AGCO stock price ($71.17) is close to the 52-week high ($71.45). Perhaps now is a good time to sell? See AGCO price chart.

5. AGCO quarterly revenue growth was 2.60%, lower than the industry and sector average revenue growth (8.71% and 4.74%, respectively). See AGCO revenue growth chart.

6. AGCO average analyst price target ($65.35) is below its current price ($71.17). See AGCO price target chart.

7. AGCO short interest (days to cover the shorts) ratio is 4.52. The stock garners more short interest than the average industry, sector or S&P 500 stock. See AGCO short interest ratio chart.

Now let's look at the key statistics for AGCO:

Metrics AGCO
Price $69.55
Average Price Target / Upside $65.35 / -6.04%
Average Analyst Rating Hold
Industry Farm & Construction Equipment
Sector Industrials
Number of Employees 21,200
Market Cap $5.57B
Forward P/E Ratio 13.54
Price/Book Ratio 0.6
PEG 0.97
Revenue (TTM) $9.35B
YoY Quarterly Revenue Growth 2.6%
Profit Margin 3.05%

What are your thoughts on AGCO?

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