Should Value Investors Buy Agco Shares (AGCO)? – October 1, 2021


At Zacks, we focus on Zacks’ proven ranking system, which emphasizes profit estimates and estimate revisions to find great stocks. Nevertheless, we are always attentive to the latest trends in value, growth and dynamism to highlight the right choices.

Given these trends, value investing is clearly one of the most preferred ways to find solid stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are undervalued by the market as a whole.

Zacks has developed the innovative Style Scores system to highlight stocks with specific characteristics. For example, value investors will be interested in stocks with good ratings in the “Value” category. When paired with a high Zacks ranking, “A” ratings in the Value category are among the strongest value stocks on the market today.

One company that investors might notice is Agco (AGCO Free report). AGCO currently has a Zacks rating of 2 (Buy), as well as an A rating for value. The stock is trading with a P / E ratio of 12.43, which compares to its industry average of 15.39. Over the past year, AGCO’s forward P / E has reached 20.46 and as low as 11.93, with a median of 15.91.

We also note that AGCO holds a PEG ratio of 0.64. This popular metric is similar to the well-known P / E ratio, except that the PEG ratio also takes into account the expected rate of earnings growth of the company. AGCO industry currently has an average PEG of 0.75. Over the past year, AGCO’s PEG has reached 2.07 and as low as 0.61, with a median of 1.02.

Investors should also recognize that AGCO has a P / N ratio of 3.05. Investors use the P / B ratio to compare the market value of a stock against its book value, which is defined as total assets minus total liabilities. This company’s current P / B looks strong compared to its industry average P / B of 5.44. Over the past 12 months, AGCO’s P / B has hit 3.77 and as low as 1.93, with a median of 3.04.

Value investors also use the P / S ratio. The P / S ratio is calculated as the price divided by the sales. Some people prefer this measure because sales are more difficult to manipulate on an income statement. This means that it could be a truer performance indicator. AGCO has a P / S ratio of 0.88. This compares to its industry’s average P / S of 1.33.

Finally, our model also highlights that AGCO has a P / CF ratio of 9.65. This metric takes into account a company’s operating cash flow and can be used to find undervalued stocks based on their strong cash flow outlook. AGCO’s current P / CF looks attractive compared to its industry average P / CF of 14.90. AGCO’s P / CF has been as high as 15.56 and as low as 8.29, with a median of 11.45, all over the past year.

These numbers are just a few of the value indicators that investors tend to look at, but they help show that Agco is likely undervalued right now. Given this, along with its strong earnings outlook, AGCO currently feels like a high value stock.

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