Is Now the Right Moment to Reassess AGCO Amid Share Price Rally in 2025?

If you’ve been watching AGCO’s stock lately and wondering whether now is the right time to act, you’re not alone. It’s one of those moments that make investors pause, look at the latest numbers, and ask: where is this story headed? AGCO just posted a 4.0% gain in the last week, bouncing back from a modest -1.1% slip over the past month. Year-to-date, the stock has climbed 19.5%, and it’s up 13.6% over the past twelve months. These figures indicate that the market still sees room for growth, even after last year's volatility in agricultural equipment and machinery stocks. Looking at a longer time frame, AGCO has delivered a 61.1% return in five years, which could be considered a rewarding outcome for long-term holders.

With all these numbers in play, how do you judge if AGCO is still undervalued or if it has already priced in all the good news? According to several valuation checks, AGCO scores a 2 out of 6, meaning it passes two major undervaluation screens. This may be worth a closer look, even if it is not an outstanding value on every metric. Next, I will walk you through the main valuation methods investors use to assess AGCO and provide some perspective on what those numbers suggest. Stay tuned until the end for a discussion on a more intuitive way to gauge AGCO’s true value that goes beyond the usual formulas.

AGCO scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: AGCO Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model is a widely used method for estimating a company’s intrinsic value by forecasting its future cash flows and discounting them back to their present value. This approach helps investors gauge what a company is truly worth today, based on expectations for the cash it will actually generate in years to come.

For AGCO, the current Free Cash Flow stands at $641 million. Looking ahead, analysts see significant growth, estimating Free Cash Flow to reach $881 million by 2029. Beyond this point, future projections are extrapolated, but the core idea is the same: AGCO is expected to continue generating healthy cash flows, which are discounted to reflect today’s value and associated risks.

Using the two-stage Free Cash Flow to Equity model, the DCF analysis puts AGCO’s intrinsic value at $138.77 per share. This is roughly 21.4% higher than the current share price, indicating the stock is notably undervalued on this metric.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for AGCO.

Our Discounted Cash Flow (DCF) analysis suggests AGCO is undervalued by 21.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: AGCO Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is a favored valuation tool for profitable companies because it compares a company’s current share price with its per-share earnings, giving investors a quick sense of how much the market is willing to pay for a dollar of profit. For businesses like AGCO that generate steady earnings, the PE ratio helps put those profits into context, showing whether the current price reflects a premium or discount relative to other opportunities.

Growth expectations and risk play a key role in determining what constitutes a “normal” or “fair” PE ratio. Fast-growing companies or those with stable earnings profiles tend to command higher multiples, while companies facing uncertainty or slower growth are valued more conservatively. As a result, a company’s operating outlook and industry environment both influence where its PE should land.

AGCO’s current PE ratio stands at 81.7x, which is meaningfully higher than its industry average of 24.2x and the peer average of 19.6x. At first glance, this suggests AGCO may be priced richly compared to sector norms. However, to gain a more tailored perspective, Simply Wall St provides the “Fair Ratio,” which for AGCO is calculated at 40.4x. The Fair Ratio is more insightful than blanket industry or peer comparisons because it integrates factors like AGCO’s specific growth prospects, risks, profit margins, market capitalization, and its overall industry dynamics.

Comparing AGCO’s actual PE of 81.7x to its Fair Ratio of 40.4x points to a stock that is trading at a premium based on these more comprehensive assumptions.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your AGCO Narrative

Earlier we mentioned there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply the story or perspective you use to explain your view on a company; it combines your assumptions about AGCO's future revenue, profit margins, and earnings into a full financial forecast, and then links that story to a fair value estimate. Narratives help you connect AGCO’s business outlook to what you think the stock is really worth, making it easier to understand the big picture rather than focusing on a single metric.

Narratives are available right on Simply Wall St’s Community page, where millions of investors share, compare, and update their perspectives in real time. These tools empower you to see how your personal view stacks up against others, and help guide buy or sell decisions by making it simple to compare each Narrative’s fair value to today’s market price. Because Narratives are updated whenever new earnings or news is released, you are always working with the latest information.

For example, investors looking at AGCO right now have Narratives with fair values as high as $145.00, driven by rapid growth and premium brand expansion, and as low as $97.00, reflecting concerns about weak demand and rising costs. This shows how your outlook can shape your investment decision.

Do you think there's more to the story for AGCO? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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