A month has gone by since the last earnings report for Agco (AGCO). Shares have lost about 5.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Agco due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

AGCO Corp Earnings and Revenues Miss Estimates in Q4

AGCO delivered an adjusted EPS of $3.78 in fourth-quarter 2023 compared with the prior-year quarter’s $4.47 per share. The reported figure missed the Zacks Consensus Estimate of $4.03.

Including one-time items, AGCO posted an EPS of $4.53 compared with the year-ago quarter’s $4.29.

Revenues decreased 2.5% year over year to $3.8 billion in the December-end quarter. The top line missed the Zacks Consensus Estimate of $4.06 billion. Excluding the favorable currency-translation impacts of 1.8%, net sales fell 4.3% year over year.

We predicted net sales to increase 4.9% year over year in the quarter, excluding the impacts of currency translation. Our
model predicted a 3.9% favorable impact of currency translation.

Operational Update

Cost of sales decreased 4.7% year over year to $2.82 billion in the fourth quarter. Gross profit increased 4.5% year over year to $983 million in the reported quarter. The gross margin was 25.9% compared with the prior-year quarter’s 24.1%.

Selling, general and administrative expenses were $417 million compared with the year-ago quarter’s $326 million. Adjusted income from operations fell 13.3% year over year to $405 million. The operating margin was 10.7% compared with the year-earlier quarter’s 12%.

Segmental Performance

Sales in the North America segment moved up 8.3% year over year to $892 million in the fourth quarter. The reported figure topped our estimate of $847 million. The segment reported an operating income of $80.5 million compared with the prior-year quarter’s $61 million. Our projection for the segment’s operating income was $94 million.

Sales in the South America segment decreased 38.9% year over year to $412 million. We expected the segment’s net sales to be $744 million. The segment reported an operating profit of $16 million compared with the prior-year quarter’s $135 million. Our estimate for the segment's operating income was $121 million. The downside was driven by lower commodity prices and farm income.

The EME (Europe/Middle East) segment’s sales were $2.26 billion compared with the $2.19-billion reported in the year-ago period. The reported figure missed our estimate of $2.3 billion. The EME’s operating income was $367 million compared with the year-ago quarter’s $319 million. We predicted EME’s operating income to be $261 million.

Sales in the Asia/Pacific segment were up 11.3% year over year to $238 million. We expected the segment’s sales to be $196 million. The segment registered an operating profit of $19 million, flat year over year. Our projection for the segment’s operating profit was $18.5 million.