Yahoo Finance Why Is Agco (AGCO) Down 13.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Agco (AGCO). Shares have lost about 13.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Agco due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
AGCO Beats Earnings and Revenue Estimates in Q1, Ups View
AGCO delivered an adjusted EPS of $3.51 in first-quarter 2023 compared with the prior-year quarter’s $2.39 per share. The reported figure beat the Zacks Consensus Estimate of $2.64.
Including one-time items, AGCO posted an EPS of $3.10 compared with the year-ago quarter’s $2.03.
Revenues increased 24.1% year over year to a record $3,334 million in the March-end quarter. The top line surpassed the Zacks Consensus Estimate of $3,146 million. Excluding the unfavorable currency-translation impacts of 5.4%, net sales rose 29.6% year over year.
Operational Update
Cost of sales increased 20.6% year over year to $2,479 million in the first quarter. The gross profit increased 35.4% year over year to $855 million in the reported quarter. The gross margin was 25.6% compared with the prior-year quarter’s 23.5%.
Selling, general and administrative expenses were $330 million compared with the year-ago quarter’s $271 million. The adjusted income from operations rose 60.1% year over year to $389 million. The operating margin was 11.7% compared with the year-earlier quarter’s 9%.
Segmental Performance
Sales in the North America segment moved up 27.7% year over year to $923 million in the first quarter. The segment reported an operating income of $102 million compared with the prior-year quarter’s $55 million.
Sales in the South America segment increased 41.4% year over year to $504 million. The segment reported an operating profit of $99.5 million compared with the prior-year quarter’s $46.1 million.
The EME (Europe/Middle East) segment’s sales were $1,704 million compared with the $1,403 million reported in the year-ago period. The EME’s operating income was $239.4 million compared with the year-ago quarter’s $162.3 million.
Sales in the Asia/Pacific segment were down 9.9% year over year to $203 million. The segment registered an operating profit of $18.1 million compared with the year-ago quarter’s $34 million.
Financial Update
AGCO Corp reported cash and cash equivalents of $559 million at the end of the first quarter of 2023, down from $656 million at the first-quarter 2022 end. Net cash used in operating activities totaled $557 in the quarter compared with $577 million in the prior-year period.
Guidance
AGCO Corp expects 2023 net sales of $14.5 billion, up from the $14 billion stated earlier. The company expects improved sales volumes and positive pricing to impact 2023 results. These tailwinds will be partially offset by a negative foreign currency translation.
Gross and operating margins are expected to be higher than the 2022 reported levels, owing to rising sales and production volumes, as well as the company’s pricing actions to mitigate material and labor cost inflation. The improved profitability is likely to support incremental investments in engineering and other technology to advance AGCO’s precision agriculture and digital initiatives. Considering these, management projects an EPS of $14.40 for 2023, up from the previously disclosed $13.50.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 13.74% due to these changes.
VGM Scores
At this time, Agco has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Agco has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AGCO Corporation (AGCO) : Free Stock Analysis Report
