AGCO Corp (AGCO) Beats On Earnings & Revenue Estimates In Q1

AGCO Corporation (NYSE:AGCO) reported first-quarter adjusted earnings per share of 86 cents, up a whopping 145.7% year over year. The reported figure also surpassed the Zacks Consensus Estimate of 42 cents by a wide margin.

Including restructuring and other infrequent expenses, the company reported earnings of 84 cents per share in the quarter, which soared 180% year over year.

Revenues edged down 0.6% year over year to $1,995.8 million. The revenue figure, however, outpaced the Zacks Consensus Estimate of $1,970 million. Excluding unfavorable currency-translation impact of around 7.1%, net sales increased approximately 6.5% year over year.

Operational Update

Cost of sales went down 2.5% to $1,539 million from the year-earlier quarter. Gross profit increased 6.7% to $456.7 million in the quarter from $428.0 million recorded in the year-ago quarter. Gross margin came in at 22.8% during the first quarter, up from the prior-year quarter’s 21.3%.

Selling, general and administrative expenses fell 0.9% year over year to $262.2 million. Adjusted income from operations surged 66.8% year over year to $94.1 million. Consequently, operating margin improved 4.7% year over year from the year-ago quarter’s 2.8%.

AGCO Corporation Price, Consensus and EPS Surprise

Segment Performance

Sales in the North America segment declined around 1.3% year over year to $496.2 million in the March-end quarter. The segment reported operating income of $30.6 million, down around 14% year over year.

Sales in the South America segment dipped around 14.2% year over year to $156 million. The segment posted operating loss of $8.5 million, narrower than the loss of $16.6 million witnessed in the year-earlier quarter.

The EME (Europe / Middle East) segment’s sales came in at $1,210.6 million, up 4% from the year-ago quarter’s reported tally. EME’s operating income jumped 29% to $127.7 million from $99 million recorded in the prior-year quarter.

Sales in the Asia/Pacific segment dropped roughly 16.3% year over year to $133 million from $158.8 million reported in the comparable period last year. The segment reported income of $3.4 million, down from the prior year’s $4.7 million.

Financial Update

AGCO reported cash and cash equivalents of $292.8 million at the end of the January-March quarter, down from $326.1 million recorded at the end of 2018. The company used $329.9 million of cash in operating activities during the three-month period ended, Mar 31, 2019, compared with cash usage of $361.3 million reported in the comparable period last year.

Guidance

AGCO projected its net sales 2019 outlook at $9.5 billion backed by improved sales volumes and positive pricing, offset by unfavorable impact of foreign currency translation. It also anticipates gross and operating margins improvement from the 2018 level, driven by positive impact of pricing and cost reduction. Considering these, the company expects 2019 adjusted earnings per share of around $4.90. Moreover, the company projects global industry demand to improve modestly in 2019.

Share Price Performance

Over the past year, AGCO’s stock has gained around 21.3%, outperforming the industry’s growth of 16.8%.

Zacks Rank & Stocks to Consider

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

A few better-ranked stocks in the Industrial Products sector are DMC Global Inc. (NASDAQ:BOOM) , Lawson Products, Inc. (NASDAQ:LAWS) and DXP Enterprises, Inc. (NASDAQ:DXPE) , each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

DMC Global has an estimated earnings growth rate of 77.3% for the ongoing year. The company’s shares have soared 76.6%, in the past year.

Lawson Products has a stellar expected earnings growth rate of 102.5% for the current year. The stock has appreciated 42% in a year’s time.

DXP Enterprises has a projected earnings growth rate of 21.6% for 2019. The company’s shares have gained 14.3%, over the past year.

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