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1. Company Snapshot

1.a. Company Description

AGCO Corporation manufactures and distributes agricultural equipment and related replacement parts worldwide.It offers horsepower tractors for row crop production, soil cultivation, planting, land leveling, seeding, and commercial hay operations; utility tractors for small- and medium-sized farms, as well as for dairy, livestock, orchards, and vineyards; and compact tractors for small farms, specialty agricultural industries, landscaping, equestrian, and residential uses.The company also provides grain storage bins and related drying and handling equipment systems; seed-processing systems; swine and poultry feed storage and delivery; ventilation and watering systems; and egg production systems and broiler production equipment.


In addition, it offers round and rectangular balers, loader wagons, self-propelled windrowers, forage harvesters, disc mowers, spreaders, rakes, tedders, and mower conditioners for harvesting and packaging vegetative feeds used in the beef cattle, dairy, horse, and renewable fuel industries.Further, the company provides implements, including disc harrows leveling seed beds and mixing chemicals with the soils; heavy tillage to break up soil and mix crop residue into topsoil; field cultivators that prepare smooth seed bed and destroy weeds; drills for small grain seeding; planters and other planting equipment; and loaders.Additionally, it offers combines for harvesting grain crops, such as corn, wheat, soybeans, and rice; and application equipment, such as self-propelled, three- and four-wheeled vehicles, and related equipment for liquid and dry fertilizers and crop protection chemicals, and for after crops emerge from the ground, as well as produces diesel engines, gears, and generating sets.


The company markets its products under the Challenger, Fendt, GSI, Massey Ferguson, and Valtra brands through a network of independent dealers and distributors.AGCO Corporation was founded in 1990 and is headquartered in Duluth, Georgia.

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1.b. Last Insights on AGCO

AGCO Corporation's recent performance was negatively impacted by severe cyclical downturns in North America and South America. The company's net sales decreased by 4.7% year-over-year to $2.5 billion, with significant inventory surplus and production cuts in North America, resulting in deeply negative margins. Weak demand and competitive pricing in South America also pressured the company's performance. Despite a $300 million share repurchase plan, which is set to commence in the fourth quarter, the near-term outlook remains challenging.

1.c. Company Highlights

2. AGCO's Q3 2025 Earnings: Resilient Performance Amidst Industry Headwinds

AGCO's financial performance in Q3 2025 was marked by net sales of $2.5 billion, down 5% year-over-year, but up 6% when excluding the Grain & Protein business divested last year. The company's adjusted operating margin was 7.5%, reflecting strong execution and disciplined operational performance. Earnings per share (EPS) came in at $1.35, beating analyst estimates of $1.26. The company's free cash flow improved significantly, with $65 million generated year-to-date, and is expected to be within its targeted range of 75% to 100% of adjusted net income for the full year.

Publication Date: Nov -08

📋 Highlights
  • Net Sales Resilience:: Q3 net sales reached $2.5 billion, down 5% YoY but up 6% excluding the divested Grain & Protein business.
  • EME Region Growth:: Europe, Middle East, and Africa drove 20% sales growth, benefiting from higher production and tractor demand.
  • Margin Stability:: Adjusted operating margin hit 7.5%, reflecting disciplined cost control despite 50% North America production cuts.
  • Capital Return Strategy:: $1 billion share repurchase program launched, with $300 million allocated to Q4, and $230 million from TAFE divestiture.
  • Free Cash Flow Progress:: Generated $65 million in free cash flow year-to-date, on track for 75-100% conversion of adjusted net income.

Regional Performance

The company's largest region, Europe, Middle East, and Africa (EME), led the quarter with a 20% increase in sales, driven by a recovery in production levels and sales of high horsepower and mid-range tractors. In contrast, North America's sales were down 10% year-over-year, with production cuts of 50% and 70% from 2023 levels. The global farm equipment market continues to face headwinds, with Brazil slightly up, Western Europe down 8%, and North America experiencing the largest year-over-year drop.

Growth Drivers and Strategy

AGCO's strategy focuses on three high-margin growth drivers: globalizing and expanding the Fendt product line, growing Precision Ag, and increasing the parts business. The company has made significant updates, including the sale of its ownership interest in TAFE and a new $1 billion share repurchase program. The Precision Ag business is a key growth driver, with the company launching Phase 1 of its FarmENGAGE digital platform and accelerating its journey to autonomous farming by 2030.

Valuation and Outlook

With a P/E Ratio of 21.15 and an EV/EBITDA of 22.63, the market is pricing in a certain level of growth and profitability for AGCO. Analysts estimate next year's revenue growth at 2.6%. The company's outlook for 2025 remains relatively unchanged, with North America expected to be down significantly, Western Europe expected to be stable, and South America expected to be modestly up. The company expects global industry demand to be around 85% of mid-cycle levels, with sales outlook unchanged despite a softer pricing outlook.

Tariff Headwinds and Mitigation

The company is managing higher costs and lowered pricing assumptions, with a focus on limiting the impact of tariffs on farmers. AGCO has a three-pronged strategy to mitigate tariff costs, including working with the supply chain, Project Reimagine to take $200 million out of the cost structure, and pricing actions. The tariff headwind is expected to be around $0.80 per share, but the net effect will be less due to pricing actions.

3. NewsRoom

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Massey Ferguson Names Prescott Frontier Days 2025 Sowing Good Deeds Winner

Dec -04

Source: globenewswire.com

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Edgestream Partners L.P. Increases Stock Holdings in AGCO Corporation $AGCO

Dec -03

Source: defenseworld.net

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AGCO Corporation (AGCO) Presents at UBS Global Industrials and Transportation Conference Transcript

Dec -02

Source: seekingalpha.com

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2 Farm Equipment Stocks Worth Watching Amid Industry Challenges

Nov -26

Source: zacks.com

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AGCO to Present at the UBS 2025 Global Industrials & Transportation Conference

Nov -21

Source: prnewswire.com

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Candriam S.C.A. Reduces Position in AGCO Corporation $AGCO

Nov -18

Source: defenseworld.net

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AGCO Brands Win Key AGRITECHNICA Awards

Nov -13

Source: prnewswire.com

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AGCO Corporation: The Near-Term Outlook Is Bad, And Valuation Is Already Above Average

Nov -09

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.08%)

6. Segments

Tractors

Expected Growth: 2%

AGCO's tractor segment growth is driven by increasing global demand for agricultural machinery, driven by population growth, urbanization, and government initiatives to enhance agricultural productivity. Additionally, the company's focus on precision agriculture, digitalization, and sustainability features in its tractors resonates with farmers, contributing to the 2% growth.

Combines, Application Equipment and Other Machinery

Expected Growth: 1%

AGCO's Combines, Application Equipment, and Other Machinery segment growth is driven by increasing global demand for agricultural products, adoption of precision farming and technology, and rising replacement demand for aging machinery fleets. Additionally, expansion in emerging markets, strategic acquisitions, and investments in product innovation and digitalization are contributing to the segment's growth.

Replacement Parts

Expected Growth: 3%

AGCO Corporation's Replacement Parts segment growth is driven by increasing farm mechanization, rising crop prices, and government subsidies for agricultural development. Additionally, the company's expanding distribution network, strategic acquisitions, and focus on precision agriculture solutions contribute to the growth.

Grain Storage and Protein Production Systems

Expected Growth: 4%

Strong demand for grain storage and protein production systems driven by increasing global food demand, population growth, and rising protein consumption. AGCO's innovative solutions, such as its GSI grain storage and Futtertec protein production systems, cater to this demand, resulting in 4% growth.

7. Detailed Products

Tractors

AGCO's tractors are designed for agricultural and farming purposes, offering a range of horsepower and features to suit different farming needs.

Combines

AGCO's combines are designed for harvesting crops such as wheat, corn, and soybeans, offering advanced technology and high-capacity harvesting.

Hay Tools

AGCO's hay tools include balers, mower-conditioners, and tedders, designed for efficient hay harvesting and processing.

Forage Equipment

AGCO's forage equipment includes forage harvesters, choppers, and wrappers, designed for harvesting and processing forage crops.

Application Equipment

AGCO's application equipment includes sprayers, spreaders, and tenders, designed for efficient and precise application of fertilizers, pesticides, and seeds.

Grain Storage and Handling

AGCO's grain storage and handling solutions include grain bins, dryers, and handling equipment, designed for efficient grain storage and management.

Precision Farming Technology

AGCO's precision farming technology includes guidance systems, yield monitoring, and data analytics, designed to optimize crop yields and reduce waste.

8. AGCO Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

AGCO Corporation's products are specialized and customized, making it difficult for substitutes to enter the market. However, the increasing trend of electrification and autonomous farming may pose a threat in the long run.

Bargaining Power Of Customers

AGCO Corporation's customers are largely fragmented and lack bargaining power. The company's strong brand reputation and wide distribution network also reduce the bargaining power of customers.

Bargaining Power Of Suppliers

AGCO Corporation's suppliers have some bargaining power due to the specialized nature of their products. However, the company's large scale of operations and diversified supply chain mitigate this risk.

Threat Of New Entrants

The agricultural equipment industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This makes it difficult for new entrants to challenge AGCO Corporation's market position.

Intensity Of Rivalry

The agricultural equipment industry is highly competitive, with several established players competing for market share. AGCO Corporation faces intense rivalry from companies like John Deere, CNH Industrial, and Kubota.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 23.02%
Debt Cost 5.43%
Equity Weight 76.98%
Equity Cost 10.60%
WACC 9.41%
Leverage 29.91%

11. Quality Control: AGCO Corporation passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Mueller Industries

A-Score: 6.3/10

Value: 4.5

Growth: 7.1

Quality: 7.9

Yield: 2.0

Momentum: 8.5

Volatility: 8.0

1-Year Total Return ->

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PACCAR

A-Score: 6.0/10

Value: 3.7

Growth: 6.7

Quality: 6.1

Yield: 8.0

Momentum: 3.0

Volatility: 8.3

1-Year Total Return ->

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REV Group

A-Score: 5.8/10

Value: 4.1

Growth: 6.2

Quality: 6.3

Yield: 4.0

Momentum: 10.0

Volatility: 4.0

1-Year Total Return ->

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Oshkosh

A-Score: 5.7/10

Value: 5.9

Growth: 6.8

Quality: 5.9

Yield: 2.0

Momentum: 7.5

Volatility: 6.0

1-Year Total Return ->

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Terex

A-Score: 4.5/10

Value: 5.6

Growth: 5.9

Quality: 5.5

Yield: 2.0

Momentum: 4.0

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
AGCO

A-Score: 4.3/10

Value: 4.0

Growth: 2.9

Quality: 3.0

Yield: 4.0

Momentum: 6.0

Volatility: 6.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

105.48$

Current Price

105.48$

Potential

-0.00%

Expected Cash-Flows