AGCO CORP /DE (AGCO): what the price requires
At today's price, AGCO CORP /DE (AGCO) is priced for +17.0% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-19 · Source: https://boothcheck.com/report/AGCO
Headline
| Field | Value |
|---|---|
| Ticker | AGCO |
| Company | AGCO CORP /DE |
| Current price | $114.26/sh |
| Composition | Tractors 66% / Replacement parts 19% / Grain storage and protein production systems 0% / Combines, application equipment and other machinery 15% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 4.5% |
| Operating margin today | 4.7% |
| Margin compression implied | -0.2pp |
| Implied growth | 17.0% |
| Multiple paid | 24x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.6% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.5pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.12σ |
| cohort percentile (of 225 peers) | 56 |
| sustained it ~5 years at this level | 41% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple value, while growth-DCF lands below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.97x | 5 | justifies |
| Earnings | 1.03x | 5 | expensive |
| Relative | 0.77x | 5 | justifies |
| Growth | 1.58x | 3 | expensive |
Families that justify the price: Asset, Earnings, Relative Families that call it expensive: Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.8%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $61.89 | 1.85x | yes | FCF base $0.5B, growth -2% (input: historical growth), terminal g 0.5%, WACC 7.8%, 5yr projection |
| DCF Exit Multiple | Growth | $112.91 | 1.01x | yes | Exit EV/EBITDA: 10.3x / 12.3x / 14.3x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $148.64 | 0.77x | yes | P/E 18x (static sector reference · 2026-04), scenarios: 15.2x / 18.0x / 20.8x (bear / base = reference held flat / bull), EV/EBITDA 12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $114.65 | 1.00x | yes | BV/sh $59.10, ROE (TTM) 17.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $157.66 | 0.72x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $72.19 | 1.58x | yes | Rev $10.4B, growth -2% (input: historical growth; tapered), Terminal P/S: 0.7x / 0.8x / 0.9x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $124.44 | 0.92x | yes | EPS $10.37, growth 2% (input: historical EPS growth), PEG=5.38 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $110.82 | 1.03x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.01B × (1−21%) / WACC 7.8% → EPV (no growth) |
| Residual Income | Asset | $156.80 | 0.73x | yes | BV $59.10 + 5yr PV of (ROE (TTM) 17.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $117.43 | 0.97x | yes | √(22.5 × EPS $10.37 × BVPS $59.10) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $110.61 | 1.03x | yes | EBITDA $0.89B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $44.89 | 2.55x | yes | FCF $545.6M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $40.18 | 2.84x | yes | SBC-adj FCF $0.51B (FCF $0.55B − SBC $0.03B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $334.61 | 0.34x | yes | EPS $10.37 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $6.98 | 16.37x | yes | BV $59.10 × (ROIC 0.9% / WACC 7.8%) |
| P/Sales Sector | Relative | $356.75 | 0.32x | yes | Revenue $10.37B × sector P/S 2.5x |
| PEG Fair Value | Relative | $388.88 | 0.29x | yes | EPS $10.37 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $112.11 | 1.02x | yes | EPS $10.37 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $2.5b |
| Net debt / NOPAT (after-tax) | 7.17x |
| Net debt / operating income (pre-tax) | 5.66x |
| Share count CAGR (buyback) | -0.7% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
AGCO is a global farm-equipment maker (tractors are 66% of the mix, replacement parts 19%, combines and application equipment 15%) whose earnings ride the agricultural-machinery cycle. The business is near the trough of a down-cycle, and the direction is the story: Q1 2026 net sales rose 14.3% to $2.3 billion on a production recovery, and adjusted operating margin improved 50 basis points to 4.6%.
Management lifted its 2026 outlook to $10.5 to $10.7 billion in sales, roughly $6 adjusted EPS, and a 7.5% to 8% adjusted operating margin, while starting a $350 million buyback and raising the dividend 3.4%. The inversion reads the price as embedding about 17% operating growth, which is really cyclical recovery off a trough rather than secular growth.
The constraint is leverage and the cycle: net debt is about $2.5 billion against trailing operating income near $627 million, and 2026 carries a $90 million tariff headwind. The price is supported by the asset and earnings-power families, so this is a value-cyclical name betting on the upturn.
Bull Case
Lead with the earnings trajectory, because AGCO sits at the most important inflection point in a cyclical business: the turn off the trough. Q1 2026 net sales rose 14.3% year over year to $2.3 billion, driven by a production recovery in Europe and North America, and adjusted operating margin improved 50 basis points to 4.6% even with parts of the business still depressed. Management was explicit that the ag-machinery industry is operating around the bottom of its cycle, with dealer inventories normalizing and conditions beginning to set up the next phase of recovery, and it lifted full-year 2026 guidance to $10.5 to $10.7 billion in sales, about $6 in adjusted EPS, and a 7.5% to 8% adjusted operating margin. When a cyclical company raises guidance and grows the top line double digits coming out of a downturn, the direction of margins and cash flow is the signal, and it points up.
The second pillar is the quality of the franchise underneath the cycle, anchored by premium brands and a growing recurring-revenue base. AGCO's Fendt is a premium tractor brand that commands pricing power, and the company is building higher-margin, less-cyclical revenue streams around it. Its filing highlights the aftermarket and services layer, noting that "extended warranty and maintenance services contracts and precision technology services and subscriptions generally have contract" terms that smooth revenue (FY2025 10-K, accession 0000880266-26-000010), and replacement parts have grown to 19% of the mix from 13% over recent years. A larger parts and services base dampens the cyclicality that has historically defined equipment makers, and it is exactly the kind of revenue the market should pay a higher multiple for.
The third pillar is the precision-agriculture growth engine and the capital return that accompanies it. AGCO is integrating PTx, its precision-ag platform built around Trimble technology, and targets $2 billion of PTx revenue by 2029 through new technology, channel activation, and geographic expansion, a secular growth layer on top of the equipment cycle. Alongside, the company started a $350 million buyback in Q2 2026 and raised the dividend 3.4% to $0.30 quarterly, returning cash while the cycle recovers. The valuation methods that capture the franchise support the price: the excess-return and residual-income models land near $115 (June 27, 2026) to $157, the earnings-power value near $111, and the Graham number near $117, all at or above the $113.59 price, so the asset and earnings families say the stock is fairly valued before any cyclical upside.
Bear Case
The structural risk to lead with is the balance sheet carrying a cyclical business through its trough, because that is where a downturn does real damage. AGCO carries net debt of about $2.5 billion against trailing operating income near $627 million, a ratio above 4x, and interest expense is not separately reported in a way that lets a clean coverage ratio be computed. Equipment makers fund large working-capital swings and dealer-financing programs, so leverage rises just as the cycle weakens and sales fall. The company is guiding to a recovery, but if the upturn stalls, a leveraged maker with a depressed margin has far less cushion than the headline guidance implies, and the cash needed to service debt and fund the buyback competes with the working capital a recovery itself would consume.
The second risk is the cyclicality the company cannot escape and the demand backdrop that remains soft. AGCO's own filing is candid that "the unpredictable nature of many of these factors and the resulting volatility in demand make it difficult for us to accurately predict sales" (FY2025 10-K, accession 0000880266-26-000010). Farm-equipment demand is driven by crop prices, farm income, and interest rates, none of which AGCO controls, and management's 2026 framework assumes industry demand at only about 86% of mid-cycle levels with Latin America down sharply, a 30% constant-currency decline in the region in Q1. The 14.3% sales growth was substantially a production-and-restocking recovery rather than end-demand strength, and if farmer purchasing stays cautious, the restocking tailwind fades and the recovery the price assumes does not arrive on schedule.
The third issue is what the conservative methods and the inversion say about the price. The inversion reads the stock as paying about 24x company-wide operating income, implying roughly 17% annual operating growth for five years, and while that pace is within what AGCO has delivered cyclically, the engine notes only about 41% of comparable fast-growers sustained it for five years. The methods that strip out the cyclical recovery are sobering: the perpetual-growth DCF lands near $62 on a negative historical-growth input, the discounted future market cap near $72, and the FCF-yield methods near $40 to $45, all well below price, and the ROIC-justified book value near $7 reflects a reported ROIC barely above 1% at the trough. Add a $90 million tariff headwind in 2026 and European tariff uncertainty, and the bear case is that the price already discounts the recovery while the down-cycle, the leverage, and the trade exposure remain live risks. If the upturn disappoints, the stock looks expensive against its trough earnings.
Valuation
AGCO is a value-cyclical case where the inversion needs reading through the cycle. At $113.59 the price reads as paying about 24x company-wide operating income, implying roughly 17% annual operating growth for five years at an 8.6% cost of capital. That growth rate is really a cyclical recovery off a trough, not secular expansion, and the engine notes the pace is within what AGCO has delivered before, though only about 41% of comparable fast-growers sustained it for five years. The priced-in assumption is characterized as within range.
The model families split between the trough view and the franchise view. The asset and earnings families, which anchor to book value and normalized earnings rather than the depressed trailing quarter, support the price: the simple excess-return model lands near $115, the two-stage version and residual income near $157, the earnings-power value near $111, and the Graham number near $117, all at or above the price. The relative methods also bracket it, with sector P/E near $149 and EV/EBITDA near $111. The growth and cash-flow methods land below price precisely because they extrapolate the recent downturn: the perpetual-growth DCF near $62 on a negative growth input, the discounted future market cap near $72, and the FCF-yield methods near $40 to $45.
The practical read is that AGCO is fairly valued on normalized, mid-cycle economics and looks expensive only if you assume the trough persists. A reader is underwriting the cyclical recovery management guides to, plus the secular precision-ag growth, at today's price. The buyback and dividend are the cash return that pays while the cycle turns, and buying back stock near a fair-to-modest premium to book is reasonable; the risk is leverage and a stalled upturn, not overpayment for the franchise itself.
Catalysts
AGCO reported Q1 2026 results in early May 2026 with net sales up 14.3% to $2.3 billion on a production recovery, adjusted operating margin up 50 basis points to 4.6%, and a stock that rose on the print. Management lifted full-year 2026 guidance to $10.5 to $10.7 billion in sales, roughly $6 in adjusted EPS, and a 7.5% to 8% adjusted operating margin, framing the business as operating around the trough of the cycle. The next quarterly report is the key checkpoint on whether the recovery is end-demand driven or mostly restocking.
The strategic catalyst is precision agriculture. AGCO is integrating its PTx platform around Trimble technology and targets $2 billion of PTx revenue by 2029, a secular growth layer on top of the equipment cycle, alongside continued global expansion of the premium Fendt brand and a growing parts-and-services base. Traction in precision-ag revenue and parts is the signal that the business is becoming less cyclical and more recurring.
Capital return is the live shareholder catalyst: AGCO started a $350 million share buyback in Q2 2026 and raised the dividend 3.4% to $0.30 quarterly. The swing factors are the timing of the ag-equipment recovery, farmer demand tied to crop prices and farm income, and trade policy: management flagged a $90 million tariff headwind for 2026 and European tariff uncertainty. Analyst targets have edged up toward roughly $128, modestly above the current price, reflecting a balanced view of the recovery against tariff and demand risk.
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- DE (DEERE & CO)
- FY2025 10-K: …factors in all markets include product performance, technology features, innovation, quality, distribution, sustainability, financing, customer service, and value. John Deere's brand recognition is a competitive factor in North America and many other parts of the world. The agricultural equipment industry continues…
- FY2025 10-K: Sales volume and other -8 Price realization +1 Currency translation Operating profit 1,207 1,627 -26 Operating margin 11.8% 14.8% Sales volumes decreased 17% in the U.S. and Canada, partially offset by an increase of 26% in India and 5% in…
- CNH (CNH INDUSTRIAL N.V.)
- FY2025 10-K: …of attachments for specialized applications, such as skid steer loaders, compact track loaders and mini-crawler excavators. Industrial Activities Competition The agriculture and construction equipment industries are highly competitive at both global and regional levels. We compete with: (i) large global full-line…
- FY2025 10-K: …competitive pricing, particularly in emerging markets and during downturns. Compliance with evolving engine emissions standards is a critical competitive factor, particularly in regions subject to frequent regulatory change such as Europe and North America. New legislation in India and China has also further…
- TTC (THE TORO COMPANY)
- FY2025 10-K: …competitors that have substantially larger operations and financial resources than we do and some that have smaller operations offering various capabilities to customers. We also experience a certain level of competition among our own brands within certain industries and end markets. Because of the diversity of our…
- FY2025 10-K: …example, demand; inflation; deflation; changing prices; foreign currency fluctuations; tariffs; duties; trade regulatory actions; industry actions; the inability of suppliers to absorb incremental costs related to inefficiencies, continue operations or otherwise remain in business; financial difficulties; changes to…
- TKR (TIMKEN CO)
- FY2025 10-K: Industrial Corp. The e-business service focuses on information and business services for authorized distributors. Timken has entered into individually negotiated contracts with some of its customers. These contracts may extend for one or more years and, if a price is fixed for any period extending beyond current…
- FY2025 10-K: …condition or results of operations could be negatively affected. Risk Relating to our Business The bearing and industrial motion industries are highly competitive, and this competition results in significant pricing pressure for our products that could affect our revenues and profitability. The global bearing…
- RRX (REGAL REXNORD CORP)
- FY2025 10-K: …have an adverse effect on our business, results of operations and financial condition. In certain markets, customers exercise significant power over business terms. There is substantial and continuing pressure on major OEMs and larger distributors to reduce costs, including the cost of products purchased from outside…
- FY2025 10-K: …based on the segment's income from operations. The Company also regularly provides to the CODM information on adjusted cost of sales and adjusted engineering, selling and administration expenses, which are significant expenses. The following sets forth certain financial information attributable to the Company's…
- GTLS (CHART INDUSTRIES, INC.)
- FY2025 10-K: …their needs and in determining appropriate products to meet those needs. Portions of our engineering expenditures are typically charged to customers, either as separate items or as components of product cost. Competition We believe we can compete effectively around the world and that we are a leading competitor in…
- FY2025 10-K: …orders in retrofit, spares and servicing offset by lower leasing orders. Repair, Service & Leasing segment backlog totaled $819.7 million as of December 31, 2025, compared to $577.1 million as of December 31, 2024, an increase of $242.6 million. Liquidity and Capital Resources Our debt instruments and related…
- FLS (FLOWSERVE CORP)
- FY2025 10-K: …Company's products and services are based on technological advances. In addition, the Company will need to compete for talent that is familiar with such technologies, including upskilling its workforce. There can be no assurance that the Company will continue to compete effectively with its industry peers as new…
- FY2025 10-K: …this Annual Report. Business Functions Our business segments share a focus on industrial flow control technology and have a number of common customers. These segments also have complementary product offerings and technologies that are often combined in applications that provide us a net competitive advantage. Our…
- VMI (VALMONT INDUSTRIES INC)
- FY2025 10-K: …investments in mechanized irrigation systems. The demand for mechanized irrigation arises from several sources: the conversion of traditional flood irrigation systems, the replacement of older mechanized systems that are beyond their useful life or technologically obsolete, and the transition from non-irrigated land…
- FY2025 10-K: …regions, it may be difficult to find skilled management for specific roles. If we struggle to attract and retain these critical skills, it could negatively impact our ability to grow profitably in the future. We face strong competition in the markets we serve. We experience competitive pressures from various…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.