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AGCO Corp's (AGCO) Q1 Earnings & Sales Top Estimates, Shares Up

AGCO Corporation’s AGCO shares have gained nearly 2% after the company reported better-than-expected first-quarter 2021 earnings. The company delivered adjusted earnings per share of $2.00 compared with the prior-year quarter’s 86 cents. The reported figure beat the Zacks Consensus Estimate of $1.11. The company’s quarterly results reflect sales growth and margin expansion across all segments.

Including one-time items, the company reported earnings per share of $1.99 compared with the year-ago quarter’s 85 cents.

Revenues increased 23.4% year over year to $2,379 million during the March-end quarter. The top-line figure also beat the Zacks Consensus Estimate of $2,215 million. Excluding the favorable currency-translation impact of 3.5%, net sales were up 19.8% year over year.

Operational Update

Cost of sales grew 22.3% year over year to $1,808 million during the first quarter. Gross profit was up 26.6% year over year to $571 million during the reported quarter. Gross margin came in at 24% compared with the prior-year period’s 23.4%.

Selling, general and administrative expenses flared up to $261 million from the year-ago quarter’s $248 million. Adjusted income from operations surged 95% year over year to $197 million. Consequently, operating margin came in at 8.2% compared with the year-earlier quarter’s 5.2%.

AGCO Corporation Price, Consensus and EPS Surprise

AGCO Corporation price-consensus-eps-surprise-chart | AGCO Corporation Quote

Segment Performance

Sales in the North America segment were up 10.7% year over year to $611 million during the January-March period. The segment reported an operating income of $75 million compared with the prior-year quarter’s $61 million.

Sales in the South America segment climbed 56.5% year over year to $241 million. The segment reported an operating profit of $16.2 million, as against the prior-year quarter’s operating loss of $8.8 million.

The EME (Europe/Middle East) segment’s sales came in at $1,327 million compared with the $1,113 million recorded in the year-ago period. The EME’s operating income was up 41.2% year over year to $144 million.

Sales in the Asia/Pacific segment were up 83% year on year to $199.9 million. The segment reported an operating profit of $21 million as against the year-ago quarter’s loss of $1.3 million.

Financial Update

AGCO reported cash and cash equivalents of $453.7 million as of Mar 31, 2021, up from the $386.7 million as of Mar 31, 2020. The company utilized $315 million cash in operating activities in first-quarter 2021 compared with the usage of $435 million in the year-ago quarter.

Guidance

The company expects net sales for the ongoing year to lie between $10.6 billion and $10.8 billion, suggesting improved sales volumes, pricing and positive impacts of foreign-currency translation. Gross and operating margins are projected to be higher than the 2020 levels, owing to higher sales and production volumes as well as margin-improvement plans. Considering these, AGCO expects adjusted earnings per share for the current year in the range of $8.40 to $8.60. The company believes higher commodity prices will drive farm income, fueling demand for farm machinery.

Share Price Performance

Over the past year, AGCO’s stock has appreciated 209.6%, outperforming the industry’s growth of 172.9%.



Zacks Rank & Stocks to Consider

AGCO currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Industrial Products sector include Caterpillar Inc. CAT, Dover Corporation DOV and Pentair plc PNR. While Caterpillar sports a Zacks Rank #1 (Strong Buy), Dover and Pentair carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Caterpillar has an estimated earnings growth rate of 25.7% for the ongoing year. The company’s shares have rallied 112% in the past year.

Dover has a projected earnings growth rate of 21.8% for 2021. Over the past year, the company’s shares have gained 65%.

Pentair has an expected earnings growth rate of 11.6% for 2021. The stock has surged 87% in a year’s time.

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