The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how agricultural machinery stocks fared in Q2, starting with Titan International (NYSE:TWI).
Agricultural machinery companies are investing to develop and produce more precise machinery, automated systems, and connected equipment that collects analyzable data to help farmers and other customers improve yields and increase efficiency. On the other hand, agriculture is seasonal and natural disasters or bad weather can impact the entire industry. Additionally, macroeconomic factors such as commodity prices or changes in interest rates–which dictate the willingness of these companies or their customers to invest–can impact demand for agricultural machinery.
The 5 agricultural machinery stocks we track reported a disappointing Q2. As a group, revenues missed analysts’ consensus estimates by 4.8% while next quarter’s revenue guidance was 2% below.
Inflation progressed towards the Fed's 2% goal recently, leading the Fed to reduce its policy rate by 50bps (half a percent or 0.5%) in September 2024. This is the first cut in four years. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be debating whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
While some agricultural machinery stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.1% since the latest earnings results.
Titan International (NYSE:TWI)
Acquiring Goodyear’s farm tire business in 2005, Titan (NSYE:TWI) is a manufacturer and supplier of wheels, tires, and undercarriages used in off-highway vehicles such as construction vehicles.
Titan International reported revenues of $532.2 million, up 10.6% year on year. This print fell short of analysts’ expectations by 2.8%. Overall, it was a softer quarter for the company with a miss of analysts’ earnings estimates and revenue guidance for next quarter missing analysts’ expectations.
Titan International Total Revenue
Titan International pulled off the biggest analyst estimates beat and fastest revenue growth of the whole group. Even though it had a great quarter relative to its peers, the market seems discontent with the results. The stock is down 11.7% since reporting and currently trades at $126.41.
A pioneer in the field of center pivot and lateral move irrigation, Lindsay (NYSE:LNN) provides a variety of proprietary water management and road infrastructure products and services.
Lindsay reported revenues of $139.2 million, down 15.4% year on year, falling short of analysts’ expectations by 3.6%. The business performed better than its peers, but it was still a mixed quarter with a miss of analysts’ organic revenue estimates.
Lindsay Total Revenue
The market seems happy with the results as the stock is up 11.7% since reporting. It currently trades at $126.41.
Expanding its markets through acquisitions since its founding, Alamo (NSYE:ALG) designs, manufactures, and services vegetation management and infrastructure maintenance equipment for governmental, industrial, and agricultural use.
Alamo reported revenues of $416.3 million, down 5.5% year on year, falling short of analysts’ expectations by 2.9%. It was a disappointing quarter as it posted a miss of analysts’ earnings estimates.
As expected, the stock is down 4.3% since the results and currently trades at $184.93.
Ceasing all production to support the war effort during World War II, Toro (NYSE:TTC) offers outdoor equipment for residential, commercial, and agricultural use.
The Toro Company reported revenues of $1.16 billion, up 6.9% year on year. This number came in 8.1% below analysts' expectations. It was a softer quarter as it also logged a miss of analysts’ earnings estimates.
The Toro Company had the weakest performance against analyst estimates among its peers. The stock is down 5.7% since reporting and currently trades at $85.83.
With a history that features both organic growth and acquisitions, AGCO (NYSE:AGCO) designs, manufactures, and sells agricultural machinery and related technology.
AGCO Corporation reported revenues of $3.25 billion, down 15.1% year on year. This number missed analysts’ expectations by 6.8%. Overall, it was a disappointing quarter as it also recorded full-year revenue guidance missing analysts’ expectations.
The stock is down 6.1% since reporting and currently trades at $95.83.
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