Comparing AGCO (AGCO) & Lindsay Manufacturing (LNN)

AGCO (NYSE: AGCO) and Lindsay Manufacturing (NYSE:LNN) are both industrial products companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, profitability, analyst recommendations, earnings and institutional ownership.

Dividends

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AGCO pays an annual dividend of $0.60 per share and has a dividend yield of 0.9%. Lindsay Manufacturing pays an annual dividend of $1.20 per share and has a dividend yield of 1.4%. AGCO pays out 19.9% of its earnings in the form of a dividend. Lindsay Manufacturing pays out 55.3% 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. AGCO has increased its dividend for 4 consecutive years and Lindsay Manufacturing has increased its dividend for 15 consecutive years. Lindsay Manufacturing is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

82.0% of AGCO shares are owned by institutional investors. Comparatively, 92.0% of Lindsay Manufacturing shares are owned by institutional investors. 16.7% of AGCO shares are owned by company insiders. Comparatively, 1.2% of Lindsay Manufacturing shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AGCO $8.31 billion 0.63 $186.40 million $3.02 21.68
Lindsay Manufacturing $517.98 million 1.83 $23.17 million $2.17 40.72

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

Risk and Volatility

AGCO has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500. Comparatively, Lindsay Manufacturing has a beta of 0.31, meaning that its share price is 69% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
AGCO 2.24% 8.04% 3.10%
Lindsay Manufacturing 4.13% 9.84% 5.18%

Analyst Recommendations

This is a summary of recent recommendations for AGCO and Lindsay Manufacturing, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AGCO 2 11 3 0 2.06
Lindsay Manufacturing 0 3 2 0 2.40

AGCO presently has a consensus price target of $72.80, suggesting a potential upside of 11.18%. Lindsay Manufacturing has a consensus price target of $93.67, suggesting a potential upside of 5.99%. Given AGCO’s higher probable upside, equities analysts plainly believe AGCO is more favorable than Lindsay Manufacturing.

Summary

Lindsay Manufacturing beats AGCO on 9 of the 17 factors compared between the two stocks.

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.

About Lindsay Manufacturing

Lindsay Corporation, together with its subsidiaries, provides water management and road infrastructure products and services in the United States and internationally. The company's Irrigation segment manufactures and markets center pivot, lateral move irrigation systems, and irrigation controls under the Zimmatic brand; hose reel travelers under the Perrot and Greenfield brands; and chemical injection systems, variable rate irrigation systems, flow meters, weather stations, soil moisture sensors, and remote monitoring and control systems under the GrowSmart brand. This segment also offers repair and replacement parts for irrigation systems and controls; water pumping stations and controls for agriculture, golf, landscape, and municipal markets under the Watertronics brand; filtration solutions for groundwater, agriculture, industrial, and heat transfer markets under the LAKOS brand; and M2M communication technology solutions, data acquisition and management systems, and custom electronic equipment under the Elecsys brand. Its Infrastructure segment provides Quickchange moveable barrier systems that help in highway reconstruction, paving and resurfacing, road widening, median and shoulder construction, and tunnels and bridge repairs; and re-directive and non-re-directive crash cushions, which are used to enhance highway safety at locations, such as toll booths, freeway off-ramps, medians and roadside barrier ends, bridge supports, utility poles, and other fixed roadway hazards. This segment also offers specialty barrier products; road marking and road safety equipment; and railroad signals and structures, and diameter steel tubing products, as well as outsourced manufacturing and production services for other companies. The company serves departments of transportation, municipal transportation road agencies, roadway contractors, subcontractors, distributors, and dealers. Lindsay Corporation was founded in 1954 and is headquartered in Omaha, Nebraska.

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