This company manufactures and distributes agricultural equipment and related replacement parts worldwide. It has recently seen an upswing in insider buying. The shares carry a dividend yield of 0.80%, paid quarterly.
AGCO (AGCO)
from The Agri-Food Value View
AGCO (AGCO) is one of the two independent, publicly traded Agri-Equipment companies. Deere (DE) being the other one. Remaining Agri-Equipment companies are part of an enterprise where we have little interest in remainder of the company.
AGCO is about a quarter the size of Deere. The sales mix of the company is different also. Europe, Africa, & Middle East (EAME) are legacy strengths acquired in mergers over time. Sales outside North America are 74% of total sales. DE’s North American sales are more than half of total sales. North America is a mature market for Agri-Equipment while areas outside of that region are likely to have higher growth.
Unit sales of tractors and combines should be down this year in North America with less weakness in other lines. High unit sales the past few years plus farmer uncertainty over crop prices will combine to hurt sales. 2015 should be flat with some improvement toward the end of that year. Replacement sales and parts revenues should then develop some strength.
AGCO is undervalued, and should be in portfolios.
Ned W. Schmidt, The Agri-Food Value View, www.agrifoodvalueview.com, 561-447-0874, March 2014