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AGCO Corp AGCO

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Agco Shows Volume Growth in Both Tractors and Combines Globally; Agriculture Demand Remains Strong

Analyst Note

| Brian Bernard, CFA, CPA |

Agco’ first-quarter results showed demand for tractors and combines were strong globally. Net sales increased 23.4% year over year to $2.4 billion, as customers continued to refresh their farm equipment. We’ve raised our fair value estimate to $81 from $77, reflecting stronger revenue and margin expectations in the near term. We believe increasing commodity prices, grain consumption and positive farmer sentiment will push sales higher, leading us to forecast nearly 17% sales growth in 2021. We also think Agco will benefit from strong replacement demand for large farm equipment, especially in North America. The average fleet age of large equipment was high entering the cycle upturn. During strong economic periods, the profitability of farmers increases significantly, affording them the ability to refresh their machine fleet.

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Company Profile

Business Description

Based in Duluth, Georgia, Agco is the third- largest agricultural equipment manufacturer, behind Deere and CNH Industrial. It has five principal brands: Massey Ferguson, Challenger, Fendt, Valtra, and GSI. Unlike its competitors, Agco's product line extends beyond self-propelled equipment and implements by offering grain handling systems and livestock management solutions. The company reports segment revenue by geographic region, with North America accounting for 24% of revenue; South America, 9%; Europe/Africa/Middle East, 59%; and Asia/Pacific, 8%. Agco's revenue in 2020 was approximately $9 billion.

Contact
4205 River Green Parkway
Duluth, GA, 30096
T +1 770 813-9200
Sector Industrials
Industry Farm & Heavy Construction Machinery
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 21,400

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