On Oct 5, Zacks Investment Research upgraded AGCO Corporation (AGCO) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
AGCO Corporation’s share price and earnings estimates have trended upward following the announcement of its record second quarter results on Jul 31. AGCO Corporation reported an impressive second-quarter 2013 with record earnings of $2.15 per share, up 3% year over year. Earnings were driven by strong market demand in South America and the Asia Pacific region.
AGCO increased its full-year 2013 earnings per share guidance to $6.00 from the previous range of $5.50-$5.70. The company also raised full-year revenue band to $10.8–$11 billion from $10.5–$10.7 billion. Growth in South America and North America is expected to be offset by modest declines in Western Europe. Global industry demand is expected to be relatively flat in 2013 compared with 2012.
This farm equipment manufacturer has an impressive run of delivering positive earnings surprises in 22 of the last 23 quarters. The long-term earnings per share growth guidance of the company stands at 9% on the back of 7.5% growth in sales.
AGCO remains committed to its plans of expanding its business in domestic and international markets. In September, AGCO entered into a 50-50 joint venture to manufacture and distribute agricultural equipment and replacement parts in Russia. In late September, AGCO purchased Johnson System Inc., a leader in structural steel manufacturing with a focus on the agricultural industry. AGCO will benefit from Johnson System’s experience in the grain handling business and full line of reputed products and custom design options that meet the unique and specific needs of any project. AGCO will also benefit from elevated agricultural commodity prices in 2013 that will support healthy farm income and sustain equipment demand.
The Zacks Consensus Estimate for 2013 increased 1% in the last 60 days to $6.13 per share. For 2014, the consensus edged up 0.3% in the last 60 days to $6.09 per share.
Other Stocks to Consider
Apart from AGCO Corporation, stocks worth considering are Kubota Corporation (KUBTY), Lonking Holdings Ltd. (LONKF) and Komatsu Ltd. (KMTUY). While Kubota carries a Zacks Rank #1 (Strong Buy), Lonking and Komatsu bot retain a Zacks Rank #2 (Buy).
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