AGCO
AGCO Corporation
$112.84
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Undervalued
Trading 50.0% below fair value
You pay
$112.84
Bear
$184.33
Fair
$225.57
Bull
$266.82
Bear
$184.33
+63.4%
$11.85 × 20x + net cash
Fair
$225.57
+99.9%
$11.85 × 24x + net cash
Bull
$266.82
+136.5%
$11.85 × 28x + net cash
Key Value Driver
Through-cycle normalized EPS ($11.85)
Implied Market Multiple
9.5x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $124.63 from 29 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $225.57 per share.
Warnings
Price-to-book value of 4.8x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $124.63 (from 29 analysts). Our estimate is 108% above the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing