What's in the Cards for AGCO Corp's (AGCO) Q3 Earnings?

AGCO Corporation AGCO is scheduled to report third-quarter 2019 quarterly numbers before the opening bell on Oct 29.

Which Way are the Estimates Headed?

The Zacks Consensus Estimate for the September-end quarter’s earnings per share is pegged at 78 cents, suggesting year-over-year decline of around 14.3%. The Zacks Consensus Estimate for total sales of $2.2 billion also represents a year-over-year fall of 0.3%.

The company has been witnessing downward estimate revisions, of late. The Zacks Consensus Estimate for the company’s third-quarter earnings moved 3.7% south to 78 cents over the past 30 days.

A Sneak Peak into Q2 Performance

In the last reported quarter, AGCO’s earnings surpassed the Zacks Consensus Estimate and improved year over year. However, the top-line figure missed the consensus mark and declined year on year.  Notably, AGCO outpaced the Zacks Consensus Estimate in all of the trailing four quarters, the average positive surprise being 33.8%.

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

Benefits from cost-reduction initiatives and positive impact of pricing are expected to have bolstered AGCO’s gross and operating margins during July-September quarter. AGCO is consistently making strategic investments to enhance and expand its product lines, upgrade system capabilities as well as improve factory productivity. These factors are likely to have contributed to its third-quarter results.

The Zacks Consensus Estimate for the North America segment’s sales is pinned at $552 million for the quarter, calling for year-over-year growth of 1.1%.  The Zacks Consensus Estimate for the segment’s operating income is $17.44 million, indicating a slump of 47.2% from the year-ago quarter. The segment’s margin in the quarter is likely to reflect higher expenses associated with product launches, weaker product mix and lower production due to reduced market outlook.  Additionally, late planting and slow crop development as well as ongoing trade concerns are likely to have impacted the segment’s results in the to-be-reported quarter.  

The Zacks Consensus Estimate for the South America segment’s third-quarter sales is $254 million, suggesting a decline of 9.6% from the prior-year quarter's $281 million. The Zacks Consensus Estimate for the segment’s operating income is pegged at $7.10 million, indicating a plunge of 45.3% from the year-ago quarter. Further, reduced market outlook for the segment are expected to have thwarted margins in the July-September quarter.

The Zacks Consensus Estimate for the EME (Europe/Middle East) segment’s quarterly sales is pinned at $1,107 million, projecting a year-on-year drop of 5%. The segment’s operating income is expected to be up 12% year on year to $122 million.

For the Asia/Pacific segment revenues, the Zacks Consensus Estimate is pegged at $227 million, indicating an improvement of 1.3% from the year-ago reported quarter. The segment’s operating income is anticipated to have edged down to $17.90 million from prior-year quarter’s $18 million.

AGCO Corporation Price and EPS Surprise

AGCO Corporation Price and EPS Surprise

AGCO Corporation price-eps-surprise | AGCO Corporation Quote

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for AGCO this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for AGCO is -3.92%. This is because currently the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 75 cents and 78 cents, respectively.

Zacks Rank: AGCO currently carries a Zacks Rank of 3.

Stocks to Consider

Here are a few Industrial Products stocks which you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

John Bean Technologies Corporation JBT has an Earnings ESP of +0.55% and currently carries a Zacks Rank of 3.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Northwest Pipe Company NWPX, another Zacks #3 Ranked stock, has an Earnings ESP of +19.23%.

Sealed Air Corporation SEE has an Earnings ESP of +2.40% and holds a Zacks Rank of 3, at present.

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