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After reading AGCO Corporation's (NYSE:AGCO) most recent earnings announcement (31 March 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
How Well Did AGCO Perform?
AGCO's trailing twelve-month earnings (from 31 March 2019) of US$326m has jumped 48% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -18%, indicating the rate at which AGCO is growing has accelerated. What's enabled this growth? Let's see if it is solely because of an industry uplift, or if AGCO has seen some company-specific growth.
In terms of returns from investment, AGCO has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 4.3% is below the US Machinery industry of 7.6%, 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 7.4% to 10%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There may be factors that are impacting the industry as a whole, thus the high industry growth rate over the same period of time. I recommend you continue to research AGCO to get a better picture of the stock by looking at:
- 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.
- 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.
- 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 31 March 2019. This may not be consistent with full year annual report figures.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.