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AGCO Corp (NYSE: AGCO) Shares Down After Negative Guidance

AGCO-Corp-(NYSE--AGCO)Following poor third quarter guidance and full-year earnings outlook for 2014, AGCO Corp (NYSE: AGCO) stock dropped 11% in early morning trading. By mid-day, stock recovered slightly but still down 8.87% to $42.92 per share, hitting close to the low 52-week range of $41.56 to $64.60.

Shares of peers in the Farm Machinery Group were also down after the warning by the Georgia agriculture equipment maker. Martin Richenhagen, CEO of Agco said the earnings revision was the result of demand causing a weakening in the quarter, thereby reducing production.

Richenhagen also stated that current trading results will be negatively impacted by lower sales levels throughout all regions and cited unfavorable foreign currency rates as another reason for the drop in stock prices. To balance this quarter’s slack demand, the company is making more aggressive cuts specific to expenses and production schedules although no details on the cuts were immediately made available.

Throughout the year, stock for Agco has spiraled downward, this after hitting October’s five-year high at $64.60 per share. Earnings are expected to hit between $0.60 and $0.65 to include a share gain of $0.15, which includes a benefit of ~$0.15 per share specific to previously recorded long-term stock compensation expense. Adjusted EPS for the full year was lowered from approximately $5 to between $4.10 and $4.30, below current expectations.

Approximately 50% of Agco’s revenue comes from the Europe/Africa/Middle East (EAME) area, more than its peers to include Deere (NYSE: DE), CNH Industrial (NYSE: CNH), and Titan Machinery, Inc. (NYSE: TITN), all experiencing a drop in stock value. For revenue, 26% came from North America, 19% from South America, and 5% from the Asia/Pacific area.

Grain prices hit a number of agriculture players, which for several months have been sliding. Corn is also down, hitting a five-year low while soybeans and wheat futures maintain a level not seen since the second quarter 2010.

Founded in 1990 and headquartered in Georgia, Agco Corporation manufactures and distributes agricultural equipment, as well as related replacement parts to customers around the world. Examples include tractors of varying types for hay production, dairy farms, orchards, and vineyards, as well as application equipment used for fertilizer and crop protection, and more.

Agco Corporation provides grain storage bins, as well as systems such as drying/handling equipment, feed/delivery poultry feed, and watering/ventilation. The company also produces diesel engines, gears, and generating sets.

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