AGCO Corp. Shares Rise 2% Despite Q3 Earnings Missing Estimates

AGCO Corporation AGCO delivered an adjusted earnings per share of 68 cents in third-quarter 2024, missing the Zacks Consensus Estimate of $1.07. The bottom line fell 83% year over year. Low commodity prices and elevated input costs impacted equipment demand in the quarter.

Despite the weaker-than-expected earnings, AGCO shares have gained 2% since, backed by the company’s aggressive cost control actions and portfolio adjustments, which will sustain margins amid weak demand. AGCO recently completed the divestiture of the Grain & Protein business on Nov. 1. This will help focus on high-growth agricultural machinery and precision agriculture technology, driving long-term profitability and cash flow.

AGCO Corporation Price, Consensus and EPS Surprise

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

Including one-time items, AGCO posted earnings of 40 cents per share compared with the year-ago quarter’s earnings of $3.74.

Revenues decreased 24.8% year over year to $2.6 billion in the September-end quarter. The top line missed the Zacks Consensus Estimate of $2.9 billion. Excluding the unfavorable currency-translation impacts of 0.6%, net sales fell 24.2% year over year.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

AGCO Corp.’s Q3 Operational Update

Cost of sales decreased 20.8% year over year to around $2 billion in the third quarter. The gross profit decreased 35.4% year over year to $603 million in the reported quarter. The gross margin was 23.2% compared with the prior-year quarter’s 27%.

Selling, general and administrative expenses were $344 million compared with the year-ago quarter’s $356 million. The adjusted income from operations fell 67% year over year to $144 million. The operating margin was 5.5% compared with the year-earlier quarter’s 12.6%.

AGCO’s Q3 Segmental Performance

Sales in the North America segment moved down 21.8% year over year to $736 million in the third quarter. The reported figure missed our estimate of $789 million. The segment reported an operating income of $53 million compared with the prior-year quarter’s $140 million. Our projection for the segment’s operating income was $56 million. The downside was driven by softer industry sales and lower end-market demand.

Sales in the South America segment decreased 47% year over year to $382 million. We expected the segment’s net sales to be $497 million. The segment reported an operating profit of $45 million compared with the prior-year quarter’s $150 million. Our estimate for the segment's operating income was $37 million. The decline was due to softer industry retail sales and lower sales of high-horsepower tractors.

The Europe/Middle East (EME) segment’s sales were around $1.3 billion compared with the $1.6 billion reported in the year-ago period. The reported figure missed our estimate of $1.49 billion, driven by lower sales across most European markets. The EME’s operating income was $83 million compared with the year-ago quarter’s $199 million. We predicted EME’s operating income to be $181 million.

Sales in the Asia/Pacific segment were down 11.7% year over year to $183 million. We expected the segment’s sales to be $163 million. The segment registered an operating profit of $7 million compared with the year-ago quarter’s $19 million. Our projection for the segment’s operating profit was $6.5 million.

AGCO Corp.’s Cash Flow Update

AGCO Corp. reported cash and cash equivalents of $623 million at the end of the third quarter of 2024, up from $596 million at the 2023-end. Net cash used in operating activities totaled $108 in the first nine months of 2024 against a cash inflow of $203 million in the prior-year comparable period.

AGCO’s 2024 Guidance

AGCO Corp expects 2024 net sales to be $12 billion. This marks a decline from the $12.5 billion stated earlier due to lower sales volumes. The guidance, however, included the positive impacts of the PTx Trimble acquisition completed in April 2024 and the impacts of the Grain and Protein business divestiture.

Management lowered its adjusted EPS projection to around $7.50 from the previously stated $8.00 for 2024.

The company reaffirms its 2024 adjusted operating margin outlook of 9%. AGCO expects the impact of lower sales and lower production volumes on its margins will be offset by its increased focus on cost control and modestly lower investments in engineering.

AGCO Corp.’s Price Performance

AGCO Corp’s shares have lost 16.8% in the past year against the industry’s growth of 7.1%.

AGCO’s Zacks Rank

AGCO currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

AGCO Corp.’s Peer Performances

Lindsay Corporation LNN delivered adjusted earnings per share of $1.17 in fourth-quarter fiscal 2024 (ended Aug. 31. 2024), beating the Zacks Consensus Estimate of $1.04. However, the bottom line fell 33% year over year.

The company generated revenues of $155 million, down 7% from the $167 million reported in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $154 million.

CNH Industrial N.V. CNH came out with third-quarter 2024 earnings of 24 cents per share, missing the Zacks Consensus Estimate of 28 cents. This compares to earnings of 42 cents a year ago.

CNH posted revenues of $5.65 billion for the quarter ended September 2024, missing the Zacks Consensus Estimate of $4.78 billion. The top line decreased 22.3% year over year.

Farm Equipment Stock Awaiting Results

Deere & Company DE is expected to release its fourth-quarter fiscal 2024 results on Nov. 21.

The Zacks Consensus Estimate for the company’s earnings per share is pegged at $3.90 for the fiscal fourth quarter, suggesting a decline of 52.8% from the year-ago reported figure. The Zacks Consensus Estimate for DE’s total revenues is pinned at $9.34 billion, indicating a year-over-year decrease of 32.4%.

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