Critical Contrast: AGCO Corporation (AGCO) vs. Meritor (MTOR)

AGCO Corporation (NYSE: AGCO) and Meritor (NYSE:MTOR) are both industrial products companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, earnings, dividends, institutional ownership, profitabiliy, analyst recommendations and risk.

Valuation and Earnings

This table compares AGCO Corporation and Meritor’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
AGCO Corporation $7.65 billion 0.73 $604.20 million $2.28 30.72
Meritor $3.15 billion 0.52 $255.00 million $6.02 3.10

AGCO Corporation has higher revenue and earnings than Meritor. Meritor is trading at a lower price-to-earnings ratio than AGCO Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

AGCO Corporation pays an annual dividend of $0.56 per share and has a dividend yield of 0.8%. Meritor does not pay a dividend. AGCO Corporation pays out 24.6% of its earnings in the form of a dividend. AGCO Corporation has raised its dividend for 3 consecutive years.

Profitability

This table compares AGCO Corporation and Meritor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AGCO Corporation 2.40% 6.84% 2.67%
Meritor 17.03% -106.67% 5.68%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for AGCO Corporation and Meritor, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AGCO Corporation 1 12 4 0 2.18
Meritor 0 1 4 0 2.80

AGCO Corporation presently has a consensus price target of $63.92, indicating a potential downside of 8.73%. Meritor has a consensus price target of $19.60, indicating a potential upside of 5.04%. Given Meritor’s stronger consensus rating and higher possible upside, analysts plainly believe Meritor is more favorable than AGCO Corporation.

Institutional and Insider Ownership

84.6% of AGCO Corporation shares are held by institutional investors. Comparatively, 93.7% of Meritor shares are held by institutional investors. 16.6% of AGCO Corporation shares are held by company insiders. Comparatively, 2.9% of Meritor shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk & Volatility

AGCO Corporation has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500. Comparatively, Meritor has a beta of 2.22, meaning that its stock price is 122% more volatile than the S&P 500.

AGCO Corporation Company Profile

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.

Meritor Company Profile

Meritor, Inc. is a supplier of a range of integrated systems, modules and components to original equipment manufacturers (OEMs) and the aftermarket for the commercial vehicle, transportation and industrial sectors. The Company’s segments include Commercial Truck & Industrial and Aftermarket & Trailer. The Commercial Truck & Industrial segment supplies drivetrain systems and components, including axles, drivelines and braking and suspension systems, for medium- and heavy-duty trucks, off-highway, military, construction, bus and coach, fire and emergency and other applications in North America, South America, Europe and Asia Pacific. The Commercial Truck & Industrial segment also includes the Company’s aftermarket businesses in Asia Pacific and South America. The Aftermarket & Trailer segment supplies axles, brakes, drivelines, suspension parts and other replacement and remanufactured parts to commercial vehicle aftermarket customers in North America and Europe.

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