The firm said it lowered its rating on the agricultural equipment manufacturer after it reported weak earnings for the 2014 first quarter.
AGCO said net income for the first quarter was $1.03 per share, compared to the $1.19 per share from the same quarter last year.
The company reported a 2.9% decrease in net sales to $2.3 billion for the 2014 first quarter, compared to the $2.4 billion from the 2013 first quarter.
Separately, TheStreet Ratings team rates AGCO CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate AGCO CORP (AGCO) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 5.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Machinery industry average. The net income increased by 35.9% when compared to the same quarter one year prior, rising from $102.50 million to $139.30 million.
- The current debt-to-equity ratio, 0.31, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.71 is somewhat weak and could be cause for future problems.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: AGCO Ratings Report