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Agco (AGCO) Down 4.3% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Agco (AGCO - Free Report) . Shares have lost about 4.3% 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 delivered an adjusted earnings per share of $2.53 in second-quarter 2024 compared with the prior-year quarter’s $4.29. The reported figure missed the Zacks Consensus Estimate of $2.88.
Including one-time items, AGCO posted a loss of $4.92 per share against the year-ago quarter’s earnings per share of $4.26.
Revenues decreased 15.1% year over year to $3.25 billion in the June-end quarter. The top line missed the Zacks Consensus Estimate of $3.49 billion. Excluding the unfavorable currency-translation impacts of 0.9%, net sales fell 14.2% year over year.
Operational Update
Cost of sales decreased 14.5% year over year to $2.41 billion in the second quarter. The gross profit decreased 16.7% year over year to $837.5 million in the reported quarter. The gross margin was 25.8% compared with the prior-year quarter’s 26.3%.
Selling, general and administrative expenses were $380 million compared with the year-ago quarter’s $350 million. The adjusted income from operations fell 33.6% year over year to $333 million. The operating margin was 10.3% compared with the year-earlier quarter’s 13.1%.
Segmental Performance
Sales in the North America segment moved down 16% year over year to $838 million in the second quarter. The reported figure missed our estimate of $916 million. The segment reported an operating income of $77 million compared with the prior-year quarter’s $137 million. Our projection for the segment’s operating income was $111 million. The downside was driven by industry sales, lower end-market demand and low sales of high-horsepower tractors.
Sales in the South America segment decreased 41.7% year over year to $349 million. We expected the segment’s net sales to be $456 million. The variance was caused primarily due to lower sales in Argentina. The segment reported an operating profit of $13 million compared with the prior-year quarter’s $121 million. Our estimate for the segment's operating income was $66 million. The decline was driven by lower sales of tractors and softer industry sales.
The EME (Europe/Middle East) segment’s sales were $1.90 billion compared with the $1.99 billion reported in the year-ago period. The reported figure missed our estimate of $2.01 billion, driven by lower sales across most European markets. The EME’s operating income was $288.5 million compared with the year-ago quarter’s $295 million. We predicted EME’s operating income to be $293 million.
Sales in the Asia/Pacific segment were down 33.6% year over year to $157 million. We expected the segment’s sales to be $203 million. The segment registered an operating profit of $12 million compared with the year-ago quarter’s $21 million. Our projection for the segment’s operating profit was $12 million.
Financial Update
AGCO Corp reported cash and cash equivalents of $657 million at the end of the second quarter of 2024, up from $596 million at the 2023 end. Net cash used in operating activities totaled $135 in the first six months of 2024 compared with an outflow of $365 million in the prior-year comparable period.
Guidance
AGCO Corp expects 2024 net sales of $12.5 billion, including the positive impacts of the PTx Trimble acquisition completed in April 2024. This marks a decline from the $13.5 billion stated earlier due to lower sales volumes.
Management lowered its adjusted EPS projection to around $8.00 from the previously stated $12.00 for 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -55.63% due to these changes.
VGM Scores
At this time, Agco has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Agco has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Agco (AGCO) Down 4.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Agco (AGCO - Free Report) . Shares have lost about 4.3% 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 Misses Q2 Earnings Estimates, Lowers '24 View
AGCO delivered an adjusted earnings per share of $2.53 in second-quarter 2024 compared with the prior-year quarter’s $4.29. The reported figure missed the Zacks Consensus Estimate of $2.88.
Including one-time items, AGCO posted a loss of $4.92 per share against the year-ago quarter’s earnings per share of $4.26.
Revenues decreased 15.1% year over year to $3.25 billion in the June-end quarter. The top line missed the Zacks Consensus Estimate of $3.49 billion. Excluding the unfavorable currency-translation impacts of 0.9%, net sales fell 14.2% year over year.
Operational Update
Cost of sales decreased 14.5% year over year to $2.41 billion in the second quarter. The gross profit decreased 16.7% year over year to $837.5 million in the reported quarter. The gross margin was 25.8% compared with the prior-year quarter’s 26.3%.
Selling, general and administrative expenses were $380 million compared with the year-ago quarter’s $350 million. The adjusted income from operations fell 33.6% year over year to $333 million. The operating margin was 10.3% compared with the year-earlier quarter’s 13.1%.
Segmental Performance
Sales in the North America segment moved down 16% year over year to $838 million in the second quarter. The reported figure missed our estimate of $916 million. The segment reported an operating income of $77 million compared with the prior-year quarter’s $137 million. Our projection for the segment’s operating income was $111 million. The downside was driven by industry sales, lower end-market demand and low sales of high-horsepower tractors.
Sales in the South America segment decreased 41.7% year over year to $349 million. We expected the segment’s net sales to be $456 million. The variance was caused primarily due to lower sales in Argentina. The segment reported an operating profit of $13 million compared with the prior-year quarter’s $121 million. Our estimate for the segment's operating income was $66 million. The decline was driven by lower sales of tractors and softer industry sales.
The EME (Europe/Middle East) segment’s sales were $1.90 billion compared with the $1.99 billion reported in the year-ago period. The reported figure missed our estimate of $2.01 billion, driven by lower sales across most European markets. The EME’s operating income was $288.5 million compared with the year-ago quarter’s $295 million. We predicted EME’s operating income to be $293 million.
Sales in the Asia/Pacific segment were down 33.6% year over year to $157 million. We expected the segment’s sales to be $203 million. The segment registered an operating profit of $12 million compared with the year-ago quarter’s $21 million. Our projection for the segment’s operating profit was $12 million.
Financial Update
AGCO Corp reported cash and cash equivalents of $657 million at the end of the second quarter of 2024, up from $596 million at the 2023 end. Net cash used in operating activities totaled $135 in the first six months of 2024 compared with an outflow of $365 million in the prior-year comparable period.
Guidance
AGCO Corp expects 2024 net sales of $12.5 billion, including the positive impacts of the PTx Trimble acquisition completed in April 2024. This marks a decline from the $13.5 billion stated earlier due to lower sales volumes.
Management lowered its adjusted EPS projection to around $8.00 from the previously stated $12.00 for 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -55.63% due to these changes.
VGM Scores
At this time, Agco has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Agco has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.