The company’s peers include CNH Global NV (ADR) (NYSE:CNH), Deere & Company (NYSE:DE), Kubota Corp (ADR) (NYSE:KUB), and Joy Global Inc. (NYSE:JOY). For the most part, these stocks are at least close to value territory; CNH and Joy, for example, currently carry trailing P/Es about even with AGCO’s. Those two stocks also have a similar level of exposure to movements in broader market indices, as shown by the fact that their betas are over 2 in each case. Deere, the largest of these companies by market capitalization at $32 billion, is priced at a small premium but still looks like a potential value stock with trailing and forward P/Es of 10 and 9 respectively. In its most recent quarter earnings were up over 20% compared to the same period in the previous fiscal year, with revenue up 10%. Kubota has been reporting double-digit growth rates in both sales and net income, and the stock is up 53% (partly, we’d imagine, on strength in the Japanese stock market). This has placed its valuation at 20 times trailing earnings, which seems a bit high to us compared to the rest of the industry.
The consensus insider purchases at AGCO are intriguing, and value investors may want to take a closer look at the company to try to determine what was affecting it in its last quarter. Of course, the insider optimism could also be taken as bullish on the industry more generally and some of AGCO’s peers also look like value prospects.
Disclosure: I own no shares of any stocks mentioned in this article.