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Agco’s Q4 Results Put Sales Growth in Positive Territory for 2020; Equipment Demand Strengthening

Analyst Note

| Brian Bernard, CFA, CPA |

Agco’s fourth-quarter results reflected improved demand for farm equipment, pushing sales higher by 8.1% year over year to $2.7 billion. Adjusted operating margins were also up in the quarter, increasing 180 basis points to 7.1% compared to the same period in 2019. The improvement was mostly attributable to stronger pricing, cost-cutting, and favorable sales mix. Agco’s free cash flow was up significantly for the full year, up to $627 million from $423 million in 2019 (positive effect from $120 million inventory reduction).

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Company Profile

Business Description

Based in Duluth, Georgia, Agco is the third- largest agricultural equipment manufacturer, behind Deere and CNH Industrial. It has five principal brands: Massey Ferguson, Challenger, Fendt, Valtra, and GSI. Unlike its competitors, Agco's product line extends beyond self-propelled equipment and implements by offering grain handling systems and livestock management solutions. The company reports segment revenue by geographic region, with North America accounting for 24% of revenue; South America, 9%; Europe/Africa/Middle East, 59%; and Asia/Pacific, 8%. Agco's revenue in 2020 was approximately $9 billion.

4205 River Green Parkway
Duluth, GA, 30096
T +1 770 813-9200
Sector Industrials
Industry Farm & Heavy Construction Machinery
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 21,400