Intrinsic value of AGCO Corporation - AGCO

Previous Close

$67.40

  Intrinsic Value

$72.30

stock screener

  Rating & Target

hold

+7%

Previous close

$67.40

 
Intrinsic value

$72.30

 
Up/down potential

+7%

 
Rating

hold

We calculate the intrinsic value of AGCO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 5.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.60
  2.84
  3.06
  3.25
  3.43
  3.58
  3.72
  3.85
  3.97
  4.07
  4.16
  4.25
  4.32
  4.39
  4.45
  4.51
  4.56
  4.60
  4.64
  4.68
  4.71
  4.74
  4.76
  4.79
  4.81
  4.83
  4.84
  4.86
  4.87
  4.89
Revenue, $m
  9,595
  9,868
  10,169
  10,500
  10,859
  11,248
  11,667
  12,117
  12,598
  13,110
  13,656
  14,236
  14,851
  15,503
  16,193
  16,923
  17,694
  18,508
  19,366
  20,272
  21,226
  22,232
  23,291
  24,406
  25,580
  26,815
  28,114
  29,480
  30,917
  32,428
Variable operating expenses, $m
  8,813
  9,057
  9,327
  9,624
  9,946
  10,295
  10,671
  11,074
  11,505
  11,965
  12,248
  12,768
  13,320
  13,905
  14,523
  15,178
  15,869
  16,599
  17,369
  18,181
  19,038
  19,939
  20,889
  21,889
  22,942
  24,049
  25,215
  26,440
  27,729
  29,084
Fixed operating expenses, $m
  364
  372
  380
  388
  397
  406
  415
  424
  433
  443
  452
  462
  472
  483
  493
  504
  515
  527
  538
  550
  562
  575
  587
  600
  613
  627
  641
  655
  669
  684
Total operating expenses, $m
  9,177
  9,429
  9,707
  10,012
  10,343
  10,701
  11,086
  11,498
  11,938
  12,408
  12,700
  13,230
  13,792
  14,388
  15,016
  15,682
  16,384
  17,126
  17,907
  18,731
  19,600
  20,514
  21,476
  22,489
  23,555
  24,676
  25,856
  27,095
  28,398
  29,768
Operating income, $m
  419
  439
  462
  487
  516
  547
  582
  619
  659
  703
  956
  1,006
  1,059
  1,116
  1,177
  1,241
  1,309
  1,382
  1,459
  1,540
  1,627
  1,718
  1,815
  1,917
  2,025
  2,138
  2,259
  2,385
  2,519
  2,660
EBITDA, $m
  834
  860
  889
  922
  959
  999
  1,042
  1,089
  1,140
  1,194
  1,252
  1,315
  1,382
  1,452
  1,528
  1,608
  1,693
  1,784
  1,879
  1,980
  2,087
  2,201
  2,320
  2,446
  2,580
  2,720
  2,869
  3,025
  3,190
  3,364
Interest expense (income), $m
  0
  79
  85
  93
  101
  110
  120
  130
  141
  154
  167
  180
  195
  211
  228
  245
  264
  284
  305
  327
  350
  374
  400
  428
  456
  486
  518
  552
  587
  624
  663
Earnings before tax, $m
  340
  354
  369
  387
  406
  428
  452
  478
  506
  536
  775
  811
  848
  888
  931
  977
  1,026
  1,077
  1,132
  1,190
  1,252
  1,318
  1,387
  1,460
  1,538
  1,620
  1,707
  1,798
  1,895
  1,997
Tax expense, $m
  92
  95
  100
  104
  110
  116
  122
  129
  137
  145
  209
  219
  229
  240
  251
  264
  277
  291
  306
  321
  338
  356
  374
  394
  415
  437
  461
  486
  512
  539
Net income, $m
  248
  258
  269
  282
  297
  312
  330
  349
  369
  391
  566
  592
  619
  648
  680
  713
  749
  786
  826
  869
  914
  962
  1,013
  1,066
  1,123
  1,183
  1,246
  1,313
  1,384
  1,458

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  7,826
  8,049
  8,295
  8,564
  8,858
  9,175
  9,517
  9,883
  10,275
  10,694
  11,139
  11,612
  12,114
  12,645
  13,208
  13,803
  14,432
  15,096
  15,796
  16,535
  17,314
  18,134
  18,998
  19,907
  20,864
  21,872
  22,931
  24,046
  25,218
  26,450
Adjusted assets (=assets-cash), $m
  7,826
  8,049
  8,295
  8,564
  8,858
  9,175
  9,517
  9,883
  10,275
  10,694
  11,139
  11,612
  12,114
  12,645
  13,208
  13,803
  14,432
  15,096
  15,796
  16,535
  17,314
  18,134
  18,998
  19,907
  20,864
  21,872
  22,931
  24,046
  25,218
  26,450
Revenue / Adjusted assets
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
Average production assets, $m
  2,562
  2,635
  2,715
  2,803
  2,899
  3,003
  3,115
  3,235
  3,364
  3,500
  3,646
  3,801
  3,965
  4,139
  4,324
  4,518
  4,724
  4,942
  5,171
  5,413
  5,667
  5,936
  6,219
  6,516
  6,830
  7,160
  7,506
  7,871
  8,255
  8,658
Working capital, $m
  643
  661
  681
  703
  728
  754
  782
  812
  844
  878
  915
  954
  995
  1,039
  1,085
  1,134
  1,185
  1,240
  1,298
  1,358
  1,422
  1,490
  1,561
  1,635
  1,714
  1,797
  1,884
  1,975
  2,071
  2,173
Total debt, $m
  1,579
  1,716
  1,867
  2,033
  2,213
  2,409
  2,619
  2,844
  3,085
  3,343
  3,616
  3,907
  4,216
  4,543
  4,889
  5,255
  5,642
  6,050
  6,481
  6,935
  7,414
  7,918
  8,450
  9,009
  9,598
  10,217
  10,869
  11,554
  12,275
  13,033
Total liabilities, $m
  4,813
  4,950
  5,101
  5,267
  5,447
  5,643
  5,853
  6,078
  6,319
  6,577
  6,850
  7,141
  7,450
  7,777
  8,123
  8,489
  8,876
  9,284
  9,715
  10,169
  10,648
  11,152
  11,684
  12,243
  12,832
  13,451
  14,103
  14,788
  15,509
  16,267
Total equity, $m
  3,013
  3,099
  3,193
  3,297
  3,410
  3,532
  3,664
  3,805
  3,956
  4,117
  4,288
  4,471
  4,664
  4,868
  5,085
  5,314
  5,556
  5,812
  6,082
  6,366
  6,666
  6,982
  7,314
  7,664
  8,033
  8,421
  8,829
  9,258
  9,709
  10,183
Total liabilities and equity, $m
  7,826
  8,049
  8,294
  8,564
  8,857
  9,175
  9,517
  9,883
  10,275
  10,694
  11,138
  11,612
  12,114
  12,645
  13,208
  13,803
  14,432
  15,096
  15,797
  16,535
  17,314
  18,134
  18,998
  19,907
  20,865
  21,872
  22,932
  24,046
  25,218
  26,450
Debt-to-equity ratio
  0.520
  0.550
  0.580
  0.620
  0.650
  0.680
  0.710
  0.750
  0.780
  0.810
  0.840
  0.870
  0.900
  0.930
  0.960
  0.990
  1.020
  1.040
  1.070
  1.090
  1.110
  1.130
  1.160
  1.180
  1.190
  1.210
  1.230
  1.250
  1.260
  1.280
Adjusted equity ratio
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385
  0.385

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  248
  258
  269
  282
  297
  312
  330
  349
  369
  391
  566
  592
  619
  648
  680
  713
  749
  786
  826
  869
  914
  962
  1,013
  1,066
  1,123
  1,183
  1,246
  1,313
  1,384
  1,458
Depreciation, amort., depletion, $m
  415
  421
  428
  435
  443
  451
  460
  470
  480
  491
  296
  309
  322
  337
  352
  367
  384
  402
  420
  440
  461
  483
  506
  530
  555
  582
  610
  640
  671
  704
Funds from operations, $m
  663
  679
  697
  717
  739
  763
  790
  819
  849
  883
  863
  901
  942
  985
  1,031
  1,080
  1,133
  1,188
  1,247
  1,309
  1,375
  1,445
  1,518
  1,596
  1,678
  1,765
  1,856
  1,953
  2,055
  2,162
Change in working capital, $m
  16
  18
  20
  22
  24
  26
  28
  30
  32
  34
  37
  39
  41
  44
  46
  49
  52
  55
  58
  61
  64
  67
  71
  75
  79
  83
  87
  92
  96
  101
Cash from operations, $m
  647
  661
  677
  695
  715
  737
  762
  788
  817
  848
  826
  862
  900
  941
  985
  1,032
  1,081
  1,134
  1,189
  1,248
  1,311
  1,377
  1,447
  1,521
  1,599
  1,682
  1,769
  1,861
  1,958
  2,061
Maintenance CAPEX, $m
  -203
  -208
  -214
  -221
  -228
  -236
  -244
  -253
  -263
  -273
  -285
  -296
  -309
  -322
  -337
  -352
  -367
  -384
  -402
  -420
  -440
  -461
  -483
  -506
  -530
  -555
  -582
  -610
  -640
  -671
New CAPEX, $m
  -68
  -73
  -81
  -88
  -96
  -104
  -112
  -120
  -128
  -137
  -146
  -155
  -164
  -174
  -184
  -195
  -206
  -217
  -229
  -242
  -255
  -268
  -283
  -298
  -313
  -330
  -347
  -365
  -384
  -403
Cash from investing activities, $m
  -271
  -281
  -295
  -309
  -324
  -340
  -356
  -373
  -391
  -410
  -431
  -451
  -473
  -496
  -521
  -547
  -573
  -601
  -631
  -662
  -695
  -729
  -766
  -804
  -843
  -885
  -929
  -975
  -1,024
  -1,074
Free cash flow, $m
  376
  380
  382
  386
  391
  398
  406
  415
  426
  438
  396
  411
  427
  445
  464
  485
  508
  532
  558
  586
  616
  648
  682
  718
  756
  797
  840
  886
  935
  986
Issuance/(repayment) of debt, $m
  120
  137
  151
  166
  180
  195
  210
  225
  241
  257
  274
  291
  309
  327
  346
  366
  387
  408
  431
  454
  479
  504
  531
  559
  589
  619
  652
  685
  721
  758
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  120
  137
  151
  166
  180
  195
  210
  225
  241
  257
  274
  291
  309
  327
  346
  366
  387
  408
  431
  454
  479
  504
  531
  559
  589
  619
  652
  685
  721
  758
Total cash flow (excl. dividends), $m
  496
  517
  533
  552
  572
  593
  616
  641
  667
  695
  669
  702
  736
  772
  810
  851
  895
  940
  989
  1,040
  1,095
  1,152
  1,213
  1,277
  1,345
  1,416
  1,492
  1,572
  1,656
  1,744
Retained Cash Flow (-), $m
  -80
  -86
  -95
  -104
  -113
  -122
  -132
  -141
  -151
  -161
  -171
  -182
  -193
  -205
  -217
  -229
  -242
  -256
  -270
  -284
  -300
  -316
  -333
  -350
  -369
  -388
  -408
  -429
  -451
  -474
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  416
  431
  439
  448
  459
  471
  484
  499
  516
  534
  498
  519
  542
  567
  594
  622
  653
  685
  719
  756
  795
  837
  880
  927
  976
  1,029
  1,084
  1,142
  1,204
  1,270
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  399
  395
  382
  369
  355
  342
  327
  312
  296
  280
  237
  222
  206
  190
  174
  158
  142
  126
  111
  96
  82
  69
  58
  47
  38
  30
  23
  18
  13
  10
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

AGCO Corporation is a manufacturer and distributor of agricultural equipment and related replacement parts. The Company sells a range of agricultural equipment, including tractors, combines, self-propelled sprayers, hay tools, forage equipment, seeding and tillage equipment, implements, and grain storage and protein production systems. The Company's segments are North America, South America, Europe/Middle East, and Asia/Pacific/Africa. The Company's products are marketed under various brands, including Challenger, Fendt, GSI, Massey Ferguson and Valtra. As of December 31, 2016, the Company distributed its products through over 3,000 independent dealers and distributors in more than 150 countries. In addition, the Company also provides retail and wholesale financing through its finance joint ventures with Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank). The Company's AGCO Power engines division produces diesel engines, gears and generating sets.

FINANCIAL RATIOS  of  AGCO Corporation (AGCO)

Valuation Ratios
P/E Ratio 33.5
Price to Sales 0.7
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 14.5
Price to Free Cash Flow 31.7
Growth Rates
Sales Growth Rate -0.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4.7%
Cap. Spend. - 3 Yr. Gr. Rate -12.5%
Financial Strength
Quick Ratio 5
Current Ratio 0.2
LT Debt to Equity 58%
Total Debt to Equity 61.1%
Interest Coverage 0
Management Effectiveness
Return On Assets 2.3%
Ret/ On Assets - 3 Yr. Avg. 3.8%
Return On Total Capital 3.7%
Ret/ On T. Cap. - 3 Yr. Avg. 6.1%
Return On Equity 5.7%
Return On Equity - 3 Yr. Avg. 8.4%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 20.5%
Gross Margin - 3 Yr. Avg. 20.9%
EBITDA Margin 6.5%
EBITDA Margin - 3 Yr. Avg. 7.4%
Operating Margin 3.9%
Oper. Margin - 3 Yr. Avg. 5.1%
Pre-Tax Margin 2.8%
Pre-Tax Margin - 3 Yr. Avg. 4%
Net Profit Margin 2.2%
Net Profit Margin - 3 Yr. Avg. 3.3%
Effective Tax Rate 44.9%
Eff/ Tax Rate - 3 Yr. Avg. 35.2%
Payout Ratio 26.9%

AGCO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AGCO stock intrinsic value calculation we used $9352 million for the last fiscal year's total revenue generated by AGCO Corporation. The default revenue input number comes from 0001 income statement of AGCO Corporation. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AGCO stock valuation model: a) initial revenue growth rate of 2.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for AGCO is calculated based on our internal credit rating of AGCO Corporation, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of AGCO Corporation.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AGCO stock the variable cost ratio is equal to 91.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $356 million in the base year in the intrinsic value calculation for AGCO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for AGCO Corporation.

Corporate tax rate of 27% is the nominal tax rate for AGCO Corporation. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AGCO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AGCO are equal to 26.7%.

Life of production assets of 12.3 years is the average useful life of capital assets used in AGCO Corporation operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AGCO is equal to 6.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2932.9 million for AGCO Corporation - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 76.449 million for AGCO Corporation is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of AGCO Corporation at the current share price and the inputted number of shares is $5.2 billion.

RELATED COMPANIES Price Int.Val. Rating
ARTW Art's-Way 2.03 0.77  str.sell
LNN Lindsay Corpor 94.40 48.92  sell

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.