Shares of AGCO Corporation (NYSE:AGCO) scaled a fresh 52-week high of $65.76 on Jun 2, before closing the trading session lower at $65.23. Shares of this farm equipment manufacturer rallied on the back of positive outlook and solid prospects.
AGCO has a healthy year-to-date return of 12.7% and a solid one-year return of 18.8%. Despite touching a 52-week high, the price of the company has underperformed the Zacks Categorized Machinery Farm industry in the last twelve months. The current rate of return for the industry is 37.9% while that of AGCO is 18.6%.
The company has a market cap of $5.2 billion. AGCO’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average positive surprise of 40.39%. The average volume of shares traded over the last three months was roughly 607.2K. The stock currently has a long-term earnings growth expectation of 12.11%.
AGCO Corporation Price and Consensus
AGCO Corporation Price and Consensus | AGCO Corporation Quote
Growth Drivers
In the first-quarter 2017 conference call, AGCO raised its net sales guidance to approximately $7.7 billion for 2017. The company believes that its gross and operating margins are likely to improve from the 2016 levels, supported by the benefit of its fixed cost-reduction efforts, as well as consistent progress on productivity and purchasing initiatives.
Based on these assumptions, earnings per share for 2017 are targeted to be approximately $2.70. AGCO projects capital expenditures to be nearly $200–$225 million and free cash flow to be in the band of $225–$250 million.
Notably, AGCO continues to focus on investment, raise efficiency of factories, improve service levels and strengthen its product offerings. The company’s consistent efforts to refresh its full line of equipment, with focus on high horsepower products for the growing professional farming sector, as well as new products, will expand current product offering.
AGCO intends to increase the level of investment to execute product development plans, resulting in increased capital expenditures and engineering spend during 2017. The company’s spending plan in 2017 is needed to maintain competitiveness and support the long-term growth of its business.
AGCO currently boasts a Zacks Rank #1 (Strong Buy).
Other Key Picks
Other top-ranked stocks in the same space include Deere & Company (NYSE:DE) , Altra Industrial Motion Corp. (NASDAQ:AIMC) and Applied Industrial Technologies, Inc. (NYSE:AIT) . All three stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Deere has a remarkable average positive earnings surprise of 70.41% for the last four quarters. Altra Industrial Motion generated an average positive earnings surprise of 15.93% over the trailing four quarters. Applied Industrial Technologies has delivered an average positive earnings surprise of 9.78% in the past four quarters.
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Deere & Company (DE): Free Stock Analysis Report
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Altra Industrial Motion Corp. (AIMC): Free Stock Analysis Report
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