AGCO Corporation (NYSE:AGCO) , a manufacturer and distributor of agricultural equipment and related replacement parts, has been performing well of late. Shares of this Zacks Rank #1 (Strong Buy) stock have gained 10.5% year to date.
If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock as AGCO looks promising and is poised to carry the momentum ahead. Additionally, the stock carries long-term earnings growth rate of 12.11%.
What’s Working in Favor of AGCO?
Estimates on the Upswing
We note that earnings estimates for AGCO have displayed a healthy uptrend. For 2017, all the 10 estimates moved up over the last 30 days, with the Zacks Consensus Estimate rising approximately 10% to $2.75. The Zacks Consensus Estimate for 2018 also jumped 8.4% over the same time period to $3.36.
Positive Earnings Surprise History
AGCO has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in all the trailing four quarters, delivering a positive average earnings surprise of 40.39%.
Upbeat Guidance
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 due to 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. Finally, the company guided its second-quarter earnings per share to be about $1.00 per share.
Stock is Undervalued
AGCO has a trailing 12-month price earnings (P/E) ratio of 27.22, while the Zacks categorized Machinery - Farm sub-industry’s average trailing 12-month P/E ratio is 27.14. Based on this ratio, the stock seems undervalued.
Other Stocks to Consider
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 (Strong Buy). You can see the 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
AGCO Corporation (AGCO): Free Stock Analysis Report
Applied Industrial Technologies, Inc. (AIT): Free Stock Analysis Report
Altra Industrial Motion Corp. (AIMC): Free Stock Analysis Report
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