AGCO Corp Earnings Miss Estimates in Q2, Shares Plummet 11%

Net sales declined 1% year over year to $2.61 billion and missed the consensus estimate of $2.73 billion. Excluding the favorable currency-translation impacts of 2.7%, net sales fell 3.7% year over year.

AGCO's Q2 Margins Narrow Y/Y

Gross profit decreased 1.9% year over year to $646 million. The gross margin contracted 30 basis points to 24.7%, as lower production volumes and higher input costs offset pricing and cost-management benefits.

Selling, general and administrative expenses were $336 million compared with the year-ago quarter’s $326 million. Adjusted operating income fell 21.1% to $172 million. The adjusted operating margin declined 170 basis points to 6.6% due to weaker sales and factory absorption in Latin America, along with tariff-related costs.

AGCO Corp’s Q2 Segmental Performance

Sales in the North America segment increased 19.7% year over year to $471.5 million in the second quarter. Higher unit sales, particularly for high-horsepower tractors and hay tools, supported the top line. The reported figure missed our estimate of $439 million. The segment reported an operating loss of $24.5 million compared with the prior-year quarter’s operating loss of $25.2 million. Our projection for the segment’s operating loss was $34.6 million.

Sales in the Latin America segment decreased 17.9% year over year to $271 million. We expected the segment’s net sales to be $218.5 million. The segment reported an operating loss of $21.8 million against the prior-year quarter’s operating income of $26.9 million. Our estimate for the segment's operating loss was $6.2 million. The downside was led by softer industry demand, lower sales and production volumes, and higher engineering expenses.

The EME (Europe/Middle East) segment’s sales decreased 2.4% year over year to $1.73 billion. The reported figure missed our estimate of $1.91 billion. The segment’s operating income was $260.2 million compared with $261.3 million in the year-ago quarter. Our estimate for the segment's operating income was $7.5 million. Sales declines across most European markets were partly offset by growth in Germany and the U.K. Cost-optimization efforts and positive pricing supported the operating performance. We predicted EME’s operating income to be $301 million.

Sales in the Asia/Pacific/Africa segment edged down 1% year over year to $134.5 million. We expected the segment’s sales to be $144 million. The segment reported an operating income of $10.3 million compared with the prior-year quarter’s $9.4 million. Lower sales across several Asian and African markets were partly offset by higher sales in Australia. Our projection for the segment’s operating profit was $6.1 million.

AGCO's Inventory & Cash Flow Remain in Focus

AGCO Corp ended June with cash and cash equivalents of $573 million, down from $862 million at the end of 2025. Inventories increased to $3.01 billion from $2.71 billion, reflecting the seasonal working-capital build and higher first-half production.

Net cash used in operating activities totaled $245 million in the first six months of 2026 against a cash inflow of $153.5 million in the year-ago period. The company completed $345 million in share repurchases during the quarter and maintained its quarterly dividend of 30 cents per share.

AGCO Corp Updates 2026 Outlook

Due to the weaker-than-expected industry conditions, the company lowered its 2026 outlook. It expects adjusted earnings of $5.50-$5.75 per share compared with the prior stated $6. AGCO expects 2026 net sales between $10.1 billion and $10.2 billion, while the adjusted operating margin is expected to be 7.5%.

Capital expenditure is forecast between $300 million and $325 million. The company targets a free cash flow conversion of 75-100% of adjusted net income. For the third quarter, AGCO projects sales of $2.3-$2.4 billion and adjusted earnings of 85-90 cents per share.

AGCO’s Zacks Rank

AGCO Corp currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

AGCO Corp Stock’s Price Performance

The company’s shares have lost 8.4% in the past year against the industry’s growth of 16.5%.

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AGCO’s Peer Performances

Lindsay Corporation LNN reported third-quarter fiscal 2026 earnings of $1.53 per share, beating the Zacks Consensus Estimate of $1.41 by 8.5%. The bottom line declined 14% year over year.

Lindsay’s sales totaled $160.8 million, down 5% year over year. The top line missed the Zacks Consensus Estimate of $169 million by 5.15%. Irrigation softness outweighed infrastructure growth. The quarter reflected persistent demand challenges in North America and Brazil.

CNH Industrial N.V. CNH reported second-quarter 2026 adjusted EPS of 13 cents, which declined from 17 cents in the prior-year quarter. The figure, however, surpassed the Zacks Consensus Estimate of 11 cents.

In the second quarter, CNH Industrial’s net sales grew 2% from the year-ago level to $4.80 billion and topped the Zacks Consensus Estimate of $4.76 billion.

Farm Equipment Stock Awaiting Results

Deere & Company DE is expected to release third-quarter fiscal 2026 results on Aug. 20.

The Zacks Consensus Estimate for Deere’s earnings per share is pegged at $4.85 for the fiscal third quarter, implying growth of 2.1% from the year-ago reported figure. The consensus estimate for Deere’s total sales is pinned at $10.8 billion, indicating a year-over-year increase of 4.6%

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