$45.57
$82.78
bear $45.57
base $61.99
bull $82.78
margin of safety $30.00
market price* $103.72
AGCO is one of the three global full-line farm machinery makers, selling tractors, combines, hay and forage equipment and sprayers under Fendt, Massey Ferguson and Valtra, plus precision-farming technology through PTx (Precision Planting and the former Trimble agriculture business, 85% owned since 2024, with Trimble holding the other 15%). Most sales are booked in Europe, with North and South America next. Demand follows farm income, so earnings swing hard: revenue rose from $7.4 billion in 2016 to $14.4 billion in 2023, then fell to $10.1 billion in 2025. Earnings power. We measure owner earnings as operating cash flow, less the cash effect of swings in inventory, receivables and payables, less stock compensation, less the capital spending needed to maintain the business. Over 2016-2025 that figure ran from about $216 million (2025) to $870 million (2021). Stripping out working-capital swings matters a lot here: in 2025 reported operating cash flow of $988 million looked strong, but roughly $496 million of it came from liquidating inventory and collecting receivables in a downturn, not from earning more, so 2025 owner earnings were only about $216 million, or $2.90 a share. Non-cash charges such as the $507 million loss on selling Grain & Protein and $370 million of impairments in 2024 are added back, because they are sunk past costs. Adding back roughly $120 million a year of interest gives the cash the business generates before its lenders, which ranged from about $300 million to $890 million over the decade, with a median of about $400 million. We use that ten-year median as the earnings anchor because it spans a full cycle: the 2016 trough, the 2021-2023 boom and the 2024-2025 downturn. It is a fair level for today's slightly smaller business: the Grain & Protein sale removed revenue, but PTx Trimble added higher-margin precision earnings and the share count has fallen from 81.7 million to about 71 million. Near-term path. Owner-earnings-based cash flow fell about 10% in 2025. We start the base case at about $345 million for year one, a small rise, because sales in the first half of 2026 were 5.7% above the first half of 2025 according to the July 2026 quarterly filing; we do not assume a fast rebound. Cases.
Base case: business cash flow climbs back toward the $400 million mid-cycle level by 2029, dips again in a normal mid-2030s downturn, and settles at about $400 million a year thereafter with no growth credited. The continuing earning power rests on a demonstrated structural position: AGCO has been one of three global full-line suppliers for decades, with Fendt's premium position in Europe and a large installed base that drives parts revenue. Amortisation of about $71 million a year, much of it on PTx Trimble technology, is treated as a cost that has to be re-spent to keep the technology current, which is why no growth is credited. The business is worth about $6.6 billion; after about $2.15 billion of net obligations (borrowings, less cash, plus Trimble's 15% interest in PTx Trimble, averaged across the seasonal working-capital swing), the shares are worth about $62.
Bear case: a full farm recession of the 2014-2016 kind, when AGCO's sales fell about 30% from the 2013 peak and owner earnings bottomed near $245 million, plays out within the decade, with business cash flow troughing near $260 million and a long-run level of about $330 million, plus the 2024-2025 downturn lingering into 2027. Even at the trough, cash flow covers interest of roughly $120 million about twice over. The business is worth about $5.4 billion, less $2.15 billion owed, or about $46 a share.
Bull case: the 2021-2023 upcycle, when business cash flow reached $760-890 million, partly repeats, with cash flow near $560 million in peak years and a long-run level near $480 million as Fendt's premium share and precision-farming retrofits continue at their demonstrated pace. That is worth about $8.0 billion, less $2.15 billion, or about $83 a share. We did not credit market-share gains, new product launches or further margin expansion in any case. Debt. Borrowings were about $2.7 billion at June 30, 2026 (including $547 million due within a year) against $573 million of cash, and are higher mid-year because AGCO borrows to fund seasonal inventory; at year-end 2025 they were $2.4 billion against $862 million of cash. The debt is investment grade and priced near market rates, so no adjustment was made for cost; no maturity or covenant materially changes the outcome. Margin of safety price. How sure are we of the earnings level? Moderately: ten years of history covering a full cycle give a wide but well-documented range, roughly $300-$900 million of business cash flow, and the median is not flattered by either extreme. The worst plausible outcome is a long farm depression like the 1980s, which no case models, combined with lost European share for Fendt; AGCO's structure would survive it, since its debt is moderate, its customers are millions of farmers rather than a few customers, and it owns hard manufacturing assets, but owners would earn little for years. If we are wrong about the two things most likely to go wrong, the depth of the next downturn and whether PTx Trimble earns its $1.9 billion price, the shares would be worth something like the high-$30s to mid-$40s. The price assumes a three-to-five-year holding period for a cycle to turn, and the business pays about $1.16 a share a year in dividends over that period, alongside steady buybacks. From a price around $30, values near our bear and base outcomes over that period imply about 20% a year, and the deeper outcome still implies a value at or above that price. Our margin of safety price is therefore $30. Change since our previous analysis: earlier figures were built on a different basis and are not comparable. On the business itself, the main news since then is that 2025 cash flow was confirmed to be inflated by inventory liquidation rather than higher earnings, the TAFE dispute was settled with the stake sold for $260 million in September 2025, and a $250 million accelerated share repurchase in late 2025 cut the share count to about 71 million.