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Was AGCO Corporation's (NYSE:AGCO) Earnings Growth Better Than The Industry's?

Simply Wall St

Assessing AGCO Corporation's (NYSE:AGCO) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess AGCO's recent performance announced on 30 September 2019 and evaluate these figures to its long-term trend and industry movements.

Check out our latest analysis for AGCO

Commentary On AGCO's Past Performance

AGCO's trailing twelve-month earnings (from 30 September 2019) of US$312m has jumped 35% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -5.0%, indicating the rate at which AGCO is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is only owing to an industry uplift, or if AGCO has seen some company-specific growth.

NYSE:AGCO Income Statement, November 28th 2019

In terms of returns from investment, AGCO has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. Furthermore, its return on assets (ROA) of 4.1% is below the US Machinery industry of 7.4%, indicating AGCO's are utilized less efficiently. However, its return on capital (ROC), which also accounts for AGCO’s debt level, has increased over the past 3 years from 5.5% to 11%.

What does this mean?

AGCO's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Recent positive growth isn't always indicative of a continued optimistic outlook. There could be variables that are affecting the entire industry hence the high industry growth rate over the same time frame. I recommend you continue to research AGCO to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for AGCO’s future growth? Take a look at our free research report of analyst consensus for AGCO’s outlook.
  2. Financial Health: Are AGCO’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2019. This may not be consistent with full year annual report figures.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.