It has been about a month since the last earnings report for Agco (AGCO). Shares have added about 5.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Agco due for a pullback? 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 Earnings Missing Estimates in Q3, Declines Y/Y

AGCO delivered an adjusted earnings per share of 68 cents in third-quarter 2024, missing the Zacks Consensus Estimate of $1.07. The bottom line fell 83% year over year. Low commodity prices and elevated input costs impacted equipment demand in the quarter.

Including one-time items, AGCO posted earnings of 40 cents per share compared with the year-ago quarter’s earnings of $3.74.

Revenues decreased 24.8% year over year to $2.6 billion in the September-end quarter. The top line missed the Zacks Consensus Estimate of $2.9 billion. Excluding the unfavorable currency-translation impacts of 0.6%, net sales fell 24.2% year over year.

Q3 Operational Update

Cost of sales decreased 20.8% year over year to around $2 billion in the third quarter. The gross profit decreased 35.4% year over year to $603 million in the reported quarter. The gross margin was 23.2% compared with the prior-year quarter’s 27%.

Selling, general and administrative expenses were $344 million compared with the year-ago quarter’s $356 million. The adjusted income from operations fell 67% year over year to $144 million. The operating margin was 5.5% compared with the year-earlier quarter’s 12.6%.

Q3 Segmental Performance

Sales in the North America segment moved down 21.8% year over year to $736 million in the third quarter. The segment reported an operating income of $53 million compared with the prior-year quarter’s $140 million. The downside was driven by softer industry sales and lower end-market demand.

Sales in the South America segment decreased 47% year over year to $382 million. The segment reported an operating profit of $45 million compared with the prior-year quarter’s $150 million. The decline was due to softer industry retail sales and lower sales of high-horsepower tractors.

The Europe/Middle East (EME) segment’s sales were around $1.3 billion compared with the $1.6 billion reported in the year-ago period. The EME’s operating income was $83 million compared with the year-ago quarter’s $199 million. 

Sales in the Asia/Pacific segment were down 11.7% year over year to $183 million. The segment registered an operating profit of $7 million compared with the year-ago quarter’s $19 million.

Cash Flow Update

AGCO Corp. reported cash and cash equivalents of $623 million at the end of the third quarter of 2024, up from $596 million at the 2023-end. Net cash used in operating activities totaled $108 in the first nine months of 2024 against a cash inflow of $203 million in the prior-year comparable period.

2024 Guidance

AGCO Corp expects 2024 net sales to be $12 billion. This marks a decline from the $12.5 billion stated earlier due to lower sales volumes. The guidance, however, included the positive impacts of the PTx Trimble acquisition completed in April 2024 and the impacts of the Grain and Protein business divestiture.

Management lowered its adjusted EPS projection to around $7.50 from the previously stated $8.00 for 2024.

The company reaffirms its 2024 adjusted operating margin outlook of 9%. AGCO expects the impact of lower sales and lower production volumes on its margins will be offset by its increased focus on cost control and modestly lower investments in engineering.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, Agco has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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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