Analyzing AGCO (AGCO) and Alamo Group (ALG)

AGCO (NYSE: AGCO) and Alamo Group (NYSE:ALG) are both industrial products companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.

Risk and Volatility

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AGCO has a beta of 0.83, suggesting that its share price is 17% less volatile than the S&P 500. Comparatively, Alamo Group has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500.

Valuation and Earnings

This table compares AGCO and Alamo Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AGCO $8.31 billion 0.64 $186.40 million $3.02 21.95
Alamo Group $912.38 million 1.50 $44.31 million $4.63 25.31

AGCO has higher revenue and earnings than Alamo Group. AGCO is trading at a lower price-to-earnings ratio than Alamo Group, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

82.0% of AGCO shares are owned by institutional investors. Comparatively, 91.5% of Alamo Group shares are owned by institutional investors. 16.6% of AGCO shares are owned by company insiders. Comparatively, 3.5% of Alamo Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for AGCO and Alamo Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AGCO 2 11 3 0 2.06
Alamo Group 0 1 1 0 2.50

AGCO currently has a consensus price target of $72.67, indicating a potential upside of 9.60%. Alamo Group has a consensus price target of $92.00, indicating a potential downside of 21.50%. Given AGCO’s higher possible upside, equities research analysts plainly believe AGCO is more favorable than Alamo Group.

Dividends

AGCO pays an annual dividend of $0.60 per share and has a dividend yield of 0.9%. Alamo Group pays an annual dividend of $0.44 per share and has a dividend yield of 0.4%. AGCO pays out 19.9% of its earnings in the form of a dividend. Alamo Group pays out 9.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. AGCO has increased its dividend for 4 consecutive years and Alamo Group has increased its dividend for 3 consecutive years. AGCO is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares AGCO and Alamo Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AGCO 2.24% 8.04% 3.10%
Alamo Group 4.86% 12.49% 8.13%

Summary

Alamo Group beats AGCO on 10 of the 17 factors compared between the two stocks.

AGCO Company Profile

AGCO Corporation manufactures and distributes agricultural equipment and related replacement parts worldwide. The company offers high horsepower tractors for larger farms, primarily for row crop production; utility tractors for small- and medium-sized farms, as well as for dairy, livestock, orchards, and vineyards; and compact tractors for small farms, specialty agricultural industries, landscaping, and residential uses. It also offers combines for harvesting grain crops, such as corn, wheat, soybeans, and rice; and application equipment, including self-propelled, three- and four-wheeled vehicles and related equipment for liquid and dry fertilizers and crop protection chemicals, and for after crops emerge from the ground. In addition, the company offers hay tools and forage equipment comprising round and rectangular balers, loader wagons, self-propelled windrowers, forage harvesters, disc mowers, spreaders, rakes, tedders, and mower conditioners for harvesting and packaging vegetative feeds used in the beef cattle, dairy, horse, and renewable fuel industries. Further, it offers implements, including disc harrows; leveling seed beds and mixing chemicals with the soils; heavy tillage to break up soil and mix crop residue into topsoil; field cultivators that prepare smooth seed bed and destroy weeds; drills for small grain seeding; and planters and other planting equipment, and loaders. Additionally, it offers grain storage bins and related drying and handling equipment systems, as well as seed-processing systems, swine and poultry feed storage and delivery, ventilation and watering systems, and egg production systems and broiler production equipment; and replacement parts, as well as produces diesel engines, gears, and generating sets. It markets its products under the Challenger, Fendt, GSI, Massey Ferguson, and Valtra brands through a network of independent dealers and distributors. AGCO Corporation was founded in 1990 and is headquartered in Duluth, Georgia.

Alamo Group Company Profile

Alamo Group Inc. designs, manufactures, distributes, and services agricultural and infrastructure maintenance equipment for governmental and industrial use worldwide. It operates in three segments: Industrial, Agricultural, and European. The company offers hydraulically-powered and tractor-mounted mowers, including boom-mounted mowers; cutters for heavy-duty and intensive use applications; and heavy duty tractors-and truck-mounted mowing, and vegetation maintenance equipment and parts. It also provides truck-mounted air vacuum, mechanical broom, and regenerative air sweepers; pothole patchers; leaf collection equipment and replacement brooms; parking lot sweepers; excavators; catch basin cleaners and roadway debris vacuum systems; truck-mounted vacuum trucks, combination sewer cleaners, and hydro excavators; snow removal and ice control products; snow plows and heavy duty snow removal equipment, hitches, and attachments; and public works and runway maintenance products, parts, and services. In addition, the company offers rotary and finishing mowers, flail and disc mowers, front-end loaders, backhoes, rotary tillers, posthole diggers, and scraper blades, as well as self-propelled zero turn radius mowers; cutting parts, plain and hard-faced replacement tillage tools, disc blades, and fertilizer application components; aftermarket agricultural parts; heavy-duty mechanical rotary mowers, snow blowers, and rock removal equipment; and replacement parts. Further, it provides rotary mowers and tractor attachments; agricultural implements; hydraulic and boom-mounted hedge and grass cutters, as well as other tractor attachments and implements; hedgerow cutters, industrial grass mowers, and agricultural seedbed preparation cultivators; self-propelled sprayers and multi-drive load-carrying vehicles; cutting blades; hydraulic and mechanical boom mowers; and high pressure cleaning systems and trenchers. The company was founded in 1955 and is headquartered in Seguin, Texas.

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