AGCO (AGCO) Scales 52-Week High On Strategic Initiatives

Shares of AGCO Corporation (NYSE:AGCO) scaled a 52-week high of $74.40 on Sep 21, eventually closing nominally lower at $73.30.

AGCO has a market cap of $5.8 billion. Average volume of shares traded over the last three months is approximately 534.5K. We note that the company has beaten the Zacks Consensus Estimate in each of the trailing four quarters, the average positive earnings surprise being 39.70%.

Notably, the stock has gained 14.4% in a year’s time, higher than the S&P 500’s gain of 4.6% during the same time frame. AGCO has also outperformed the industry’s gain with respect to share price movement, during the same time frame. Shares of the company have gained 53.5%, while the industry registered 47% growth.

Further, AGCO sports a Zacks Rank #1 (Strong Buy). The company has an impressive Growth Style Score of B. Our Growth Style Score highlights all the vital metrics of a company’s financials to obtain a clearer picture of the quality and sustainability of its growth.

Our research shows that stocks with Style Scores of A or B, when combined with a Zacks Rank #1, 2 (Buy) or 3 (Hold), offer the best investment opportunities.

What's Driving AGCO?

AGCO’s share price momentum can primarily be attributed to its focus on innovative product launches, expansion of production capabilities and geographic reach, as well as strategic acquisitions.

In line with this, AGCO recently rolled out an innovative combine harvester — IDEAL. This harvester will strengthen the company’s global harvesting offering and boost its full line of agricultural solutions. Further, the company announced the expansion of its parts distribution center in Regina to facilitate faster parts delivery to customers in Western Canada.

In addition, this agricultural equipment maker has entered into an agreement with CP Foods to form a joint venture (JV) for manufacturing protein-production equipment. This JV will produce protein-production solutions for AGCO’s GSI division and significantly expand its Asian production capabilities.

AGCO has three acquisitions in the pipeline which are yet to be accomplished. The company has agreed to acquire the Precision Planting equipment business from The Climate Corporation. This buyout will aid AGCO’s broader distribution of Precision Planting technology and continue the development of innovative products.

Further, the Lely acquisition is likely to close by the beginning of the fourth quarter 2017. Again, the acquisition of Kepler Weber — a storage business in Brazil — is pending. These acquisitions will likely drive the company’s growth.

Moreover, AGCO continues to make strategic investments in order to refresh and expand its product lines, upgrade system capabilities and improve factory productivity.

All these measures have reinstated investors’ confidence and are anticipated to boost the company’s share price in the days ahead.

Additionally, positive estimate revisions reflect optimism in the company’s potential, as earnings growth is often an indication of robust prospects (and stock price gains) ahead. Estimates for AGCO have moved up in the past 60 days, reflecting analysts’ bullish outlook. The earnings estimate for 2017 has gone up 7.8%, while that of 2018 moved up 6.8%. Further, the company’s long-term earnings growth rate of 13.5% holds promise.

Other Key Picks

Other similarly-ranked stocks in the industrial products sector include Caterpillar Inc. (NYSE:CAT) , Terex Corp. (NYSE:TEX) and EnPro Industries, Inc. (NYSE:NPO) . You can see the complete list of today’s Zacks #1 Rank stocks here.

Caterpillar has an expected long-term earnings growth rate of 9.5%.

Terex has an expected long-term earnings growth rate of 19.7%.

EnPro Industries has an expected long-term earnings growth rate of 15.9%.

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