Morningstar Rating

Stock Research and Analysis

by Adam Fleck, CFA

Bulls Say

Though AGCO trails Deere and CNH by a substantial margin in North America, it holds strong positions in South America and Western Europe.
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 last five years versus only 10% the five years prior.
The firm owns about 25% of TAFE, an Indian tractor manufacturer, which distributes AGCO's Massey Ferguson line throughout India. The relationship has garnered Massey Ferguson a sizable portion of the country's tractor market. Read more 

Bears Say

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

Management

CEO Martin Richenhagen has held his post since 2004 and the chairman's seat since 2006. His previous experience includes several years as a group president of Claas, a European farm equipment manufacturer. We like that stock grants constitute a large   Read more 

Profile

Based in Duluth, Ga., AGCO manufactures agricultural equipment such as tractors, combines, sprayers, and hay balers through its Challenger, Massey Ferguson, Fendt, and Valtra   Read more 

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