Ideas for Today and Tomorrow

New Moves In New Places: AGCO Corporation

Objectives of The Presentation

Look into AGCO Corporation (AGCO)

Background Information

Stability Price and Growth Price: Is It Undervalued Now Competitive Advantage:

Does AGCO Stand Apart

Situational Play: If Its Undervalued: How will it go back to intrinsic value

AGCO Background

As a global manufacturer of agricultural equipment, AGCO offers a full line of tractors, combines, hay tools, sprayers, forage and tillage equipment There products are distributed through more than 2,700 independent dealers and distributors in more than 140 countries worldwide. State the desired objectives.

AGCO Corporation Valuation

Currently selling at

$49.68 per share

From a stability perspective (or an EPV valuation focus) the intrinsic value is

$63.88

EPV Definition The basic concept of EPV is that one should value a stock based on the current free cash flow of a company and not on future projections which may, or may not, come true. This valuation tool excludes the potential growth that a company may have so that needs to be looked at separately. Since future growth is excluded from the analysis, only the maintenance capital expenditures are subtracted from after-tax EBIT (earnings before interest and taxes) and growth capex is ignored

From a growth perspective (or a DCF valuation focus) the intrinsic value is

$82.15

DCF Definition A valuation method used to estimate the attractiveness of an investment opportunity.

Competitive Advantage

Highly Competitive Industry over the past 10 years (as shown by major competitors Deere, Caterpillar, CNH Global NV) It's likely that AGCO is in an industry with low barriers to entry, spurring high competition. If Gross Margins are at least satisfactory, it's likely AGCO invests heavily in R&D and Sales, General & Administrative expenses.

Only $2.27 of every $100 of Revenue have been profit, on average over the past 10 years.

They also have inconsistent gross profit with a ninefold increase in gross margin profit (From 18% to 96%

Situational Play: How Will AGCO Return To Value

Healthy Industry Demand And Strong Product Line Led To 14 % Year over Year Advance in Sales (Now 2.69 Billion Dollars) 54 Percent of Sales in Europe

As Europe Recovers, this issue follows

Summary Of AGCO

A Force in Agricultural Equipment Undervalued

Based On DCF and EPV Is there one?

Competitive Advantage:

Situational Play:

Healthy Industry and European Recovery

Sources

Morningstar ValueLine Vuru Old School Value Software AGCO Corporate Website AGCO 10-K