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Is Agco (AGCO) a Great Value Stock Right Now?

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Zacks Equity Research
·2 min read
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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is Agco (AGCO). AGCO is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 19.11 right now. For comparison, its industry sports an average P/E of 24.67. Over the past year, AGCO's Forward P/E has been as high as 22.35 and as low as 7.09, with a median of 16.46.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. AGCO has a P/S ratio of 0.98. This compares to its industry's average P/S of 1.49.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Agco is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AGCO feels like a great value stock at the moment.


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Zacks Investment Research