Should Value Investors Buy Agco (AGCO) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Neverthe...
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is Agco (AGCO). AGCO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 12.49, which compares to its industry's average of 15.98. AGCO's Forward P/E has been as high as 20.46 and as low as 12.49, with a median of 16.08, all within the past year.
AGCO is also sporting a PEG ratio of 0.64. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. AGCO's PEG compares to its industry's average PEG of 0.78. Within the past year, AGCO's PEG has been as high as 2.07 and as low as 0.64, with a median of 1.15.
We should also highlight that AGCO has a P/B ratio of 3.05. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 5.61. Over the past 12 months, AGCO's P/B has been as high as 3.77 and as low as 1.93, with a median of 3.02.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AGCO has a P/S ratio of 0.93. This compares to its industry's average P/S of 1.4.
Finally, investors should note that AGCO has a P/CF ratio of 9.64. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. AGCO's P/CF compares to its industry's average P/CF of 15.37. Over the past year, AGCO's P/CF has been as high as 15.56 and as low as 8.29, with a median of 11.45.
These are just a handful of the figures considered in Agco's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that AGCO is an impressive value stock right now.
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