Oshkosh (OSK) & AGCO (AGCO) Critical Review

Oshkosh (NYSE: OSK) and AGCO (NYSE:AGCO) are both mid-cap auto/tires/trucks companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, profitability, risk, dividends, earnings and analyst recommendations.

Insider and Institutional Ownership

93.6% of Oshkosh shares are owned by institutional investors. Comparatively, 82.6% of AGCO shares are owned by institutional investors. 2.0% of Oshkosh shares are owned by insiders. Comparatively, 16.6% of AGCO shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and price targets for Oshkosh and AGCO, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Oshkosh 0 4 10 0 2.71
AGCO 3 9 4 0 2.06

Oshkosh presently has a consensus target price of $92.75, suggesting a potential upside of 0.71%. AGCO has a consensus target price of $70.36, suggesting a potential downside of 2.58%. Given Oshkosh’s stronger consensus rating and higher possible upside, equities analysts plainly believe Oshkosh is more favorable than AGCO.

Dividends

Oshkosh pays an annual dividend of $0.96 per share and has a dividend yield of 1.0%. AGCO pays an annual dividend of $0.56 per share and has a dividend yield of 0.8%. Oshkosh pays out 25.5% of its earnings in the form of a dividend. AGCO pays out 22.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Oshkosh has increased its dividend for 2 consecutive years and AGCO has increased its dividend for 3 consecutive years.

Earnings & Valuation

This table compares Oshkosh and AGCO’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Oshkosh $6.83 billion 1.01 $285.60 million $3.76 24.49
AGCO $7.41 billion 0.78 $160.10 million $2.54 28.43

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

Profitability

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

Net Margins Return on Equity Return on Assets
Oshkosh 4.18% 15.14% 6.54%
AGCO 2.59% 7.50% 2.90%

Volatility and Risk

Oshkosh has a beta of 1.84, meaning that its stock price is 84% more volatile than the S&P 500. Comparatively, AGCO has a beta of 0.83, meaning that its stock price is 17% less volatile than the S&P 500.

Summary

Oshkosh beats AGCO on 12 of the 17 factors compared between the two stocks.

About Oshkosh

Oshkosh Corporation is a manufacturer and marketer of access equipment, specialty vehicles and truck bodies for the primary markets of defense, concrete placement, refuse hauling, access equipment, and fire and emergency. The company’s brands include Oshkosh, JLG, Pierce, McNeilus, IMT, Frontline, Jerr-Dan, CON-E-CO and London. The Company operates through four segments: Access equipment, Defense, Fire & emergency and Commercial. The Access equipment segment provides aerial work platforms and telehandlers to position workers and materials at elevated heights. The Defense segment provides supply parts and services and wheeled vehicles. The Fire & Emergency segment manufactures and markets commercial and custom fire vehicles, simulators and emergency vehicles. The Commercial segment manufactures, markets and distributes concrete mixers, portable concrete batch plants, and vehicle and vehicle body components.

About AGCO

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.

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