Morningstar Rating

Stock Research and Analysis

by Kwame Webb, CFA

Bulls Say

Although AGCO's market share trails Deere and CNH by a substantial margin in North America, it holds 50% of the Brazilian market.
As AGCO has refocused its attention on internal profitability and working capital management, returns on invested capital have improved to more than 13% during the past five years versus only 10% over the prior five years.
The consolidation of low-horsepower tractor manufacturing in China is expected to generate $50 million-$70 million of annual savings over the long term. Read more 

Bears Say

New Western European engines may face difficulty getting traction in Eastern Europe because of more-stringent fuel requirements; even as current economic headwinds abate, Western Europe could face used-equipment oversupply.
AGCO is working to reduce its North American dealer footprint to create more exclusive arrangements, but the process may take several years.
AGCO's R&D spending has increased faster than Deere's and CNH's during the past five years but still trails as a percentage of sales. AGCO's R&D cost growth may continue to outpace revenue gains as it fights to be relevant. Read more 

Management

We give AGCO a Standard Stewardship Rating. Over the past decade, the company has aggressively closed several acquisitions, including Challenger (2002), Valtra (2004), and GSI (2012). Over this period AGCO has simultaneously increased overall ROICs,  Read more 

Profile

Duluth, Georgia-based AGCO manufactures agricultural equipment through its Challenger, Massey Ferguson, Fendt, Valtra, and GSI brands. The firm generates 51% of sales in   Read more 

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