The U.S economy is recovering at a faster-than-expected pace, aided by substantial federal stimulus and rising consumer demand. As the economy gradually reopens, the industrial sector is expanding its operational capabilities, snapping out of its pandemic-driven slump.
U.S Industrial production rose 6.6 % year-over-year in July 2021, following an increase of 9.9% year-over-year in June. Furthermore, President Biden’s infrastructure plan is expected to drive the sector’s growth further.
Given the sector’s robust growth prospects, we believe fundamentally sound industrial stocks, AGCO Corporation (AGCO), Oshkosh Corporation (OSK), ManpowerGroup Inc. (MAN), and Terex Corporation (TEX), which look undervalued at their current price levels, should be solid bets now.
AGCO Corporation (AGCO)
AGCO in Duluth, Ga., manufactures and distributes agricultural equipment and related replacement parts worldwide. The company sells a range of agricultural equipment, including tractors, combines, self-propelled sprayers, seeding and tillage equipment, and grain storage and protein production systems.
On July 15, AGCO declared a regular quarterly dividend of $0.20 per common share to be paid on September 15, 2021, to all stockholders of record as of the close of business on August 16, 2021.
In terms of non-GAAP forward PEG, AGCO is currently trading at 0.45x, which is 72.6% lower than the 1.63x industry average. Its 0.99 forward EV/Sales multiple is 48.3% lower than the 1.91 industry average.
AGCO’s net sales increased 43.5% year-over-year to $2.88 billion in its fiscal second quarter, ended June 30. Its gross profit grew 60% from its year-ago value to $692.40 million, while its net income attributable to AGCO and subsidiaries improved 305.7% year-over-year to $282.80 million. The company’s EPS increased 301.1% year-over-year to $3.73.
Analysts expect AGCO’s revenues to increase 24.3% year-over-year to $11.37 billion in the current year. A $9.66 consensus EPS estimate for the current year indicates a 72.2% rise versus the last year. Furthermore, AGCO surpassed the Street’s EPS estimates in each of the trailing four quarters. Shares of AGCO have gained 72.3% in price over the past year and 25.3% year-to-date.
It is no surprise that AGCO has an overall rating of B, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
The stock also has an A grade for Value. Among the 31 stocks in the Agriculture industry, AGCO is ranked #7.
To see additional AGCO ratings for Growth, Sentiment, Stability, Quality, and Momentum, click here.
Oshkosh Corporation (OSK)
OSK designs, manufactures, and markets specialty vehicles and vehicle bodies worldwide. The Oshkosh, Wis., company operates through four segments: Access equipment; Defense; Fire & Emergency; and Commercial.
On June 22, Oshkosh Defense, a wholly owned subsidiary of OSK, announced that it would open a dedicated facility in Spartanburg, South Carolina, to build the United States Postal Service (USPS) Next Generation Delivery Vehicle (NGDV). USPS selected Oshkosh Defense for the multi-billion-dollar NGDV contract in February 2021 to deliver between 50,000 and 165,000 vehicles over 10 years. This is expected to improve the company’s financials substantially over the extended period.
OSK’s Fire & Emergency segment unveiled the Volterra™ platform of electric vehicles (EVs) by introducing two new trucks under the Pierce Manufacturing and Oshkosh Airport Products brands earlier in the same month. Again, this demonstrates OSK’s advancement in deploying sustainable technologies.
OSK’s 0.86 forward non-GAAP PEG multiple is 47% lower than the 1.63 industry average. In terms of forward EV/Sales, OSK is currently trading at 0.92x, which is 51.7% lower than the 1.91x industry average. OSK’s net sales increased 39.7% year-over-year to $2.21 billion in its fiscal third quarter, ended June 30. Operating income stood at $203.80 million, up 71.8% from the same period last year. Its net income grew 166.7% from its year-ago value to $213.90 million. The company’s EPS increased 162.4% year-over-year to $3.07.
A $2.17 billion consensus revenue estimate for its fiscal fourth quarter (ending September 2021) indicates a 21.9% increase year-over-year. The Street expects the company’s EPS to rise 42.3% from the prior-year quarter to $1.85 in the current quarter. OSK has a notable earnings surprise history as well; it beat the consensus EPS estimates in three out of the trailing four quarters.
OSK gained 45.7% in price over the past year to close yesterday’s trading session at $109.33. The stock has gained 28.3% year-to-date.
OSK has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. In addition, OSK has an A grade for Value. It is ranked #17 of the 63 stocks in the Auto & Vehicle Manufacturers industry.
Click here to view additional OSK ratings for Momentum, Growth, Sentiment, Quality, and Stability.
Click here to check out our Automotive Industry Report for 2021
ManpowerGroup Inc. (MAN)
MAN provides workforce solutions and services in the Americas, Southern Europe, Northern Europe, and the Asia Pacific Middle East. The company offers recruitment services, including permanent, temporary, and contract professionals and administrative and industrial positions. MAN is headquartered in Milwaukee, Wis.
On August 24, MAN announced that it has agreed to acquire ettain group (ettain), one of the largest privately held IT resourcing and services providers in North America. The acquisition is expected to accelerate its strategy of diversifying its business mix into higher growth and higher-value services.
In terms of forward EV/Sales, MAN is currently trading at 0.31x, which is 83.7% lower than the 1.91x industry average. Its 0.31 forward Price/Sales ratio is 79.7% lower than the 1.53 industry average.
For the fiscal second quarter, ended June 30, MAN’s revenues from services increased 41% year-over-year to $5.28 billion. Its gross profit grew 49.1% from its year-ago value to $860.10 million, while its net earnings improved 273.3% year-over-year to $111.60 million over the period. The company’s EPS increased 282% year-over-year to $2.02.
A $5.32 billion consensus revenue estimate for the current quarter, ending September 2021, indicates a 16.1% improvement from the same period last year. Analysts expect the company’s EPS to be $1.90 in the current quarter, marking a 58.3% rise year-over-year. In addition, MAN surpassed consensus EPS estimates in each of the trailing four quarters.
MAN has gained 32.9% in price year-to-date. Over the past year, the stock has gained 68.3% to close yesterday’s trading session at $119.84.
MAN’s solid growth prospect is reflected in its POWR Ratings. MAN has an overall A rating, which equates to Strong Buy in our proprietary rating system. In addition, MAN has a grade of A for Growth and Value. Of the 18 stocks in the A-rated Outsourcing – Staffing Services industry, MAN is ranked #6.
Beyond what we’ve stated above, we have also rated MAN for Momentum, Sentiment, Quality, and Stability. Click here to view all MAN ratings.
Terex Corporation (TEX)
Westport, Conn.-based TEX manufactures and sells aerial work platforms and materials processing machinery worldwide. The company operates in two segments, Aerial Work Platforms (AWP) and Materials Processing (MP).
On July 16, TEX declared a $0.12 quarterly dividend per share. The dividend is payable on September 20, 2021, to all stockholders of record as of the close of business on August 12, 2021.
TEX’s 0.83 forward Price/Sales multiple is 46.1% lower than the 1.53 industry average. In terms of non-GAAP forward PEG, it is currently trading at 0.06x, which is 96.3% lower than the 1.63x industry average.
TEX’s net sales increased 50.4% year-over-year to $1.04 billion in its fiscal second quarter, ended June 30. Its gross profit grew 116.2% from its year-ago value to $231.60 million. TEX’s income from operations came in at $122.50 million, indicating a 1,555.4% rise year-over-year. The company’s EPS increased 900% year-over-year to $1.04.
The Street expects TEX’s revenues to rise 27.4% year-over-year to $3.92 billion in the current year. The $3.06 consensus EPS estimate for the current year indicates a 2,253.8% improvement year-over-year. Also, TEX topped the Street’s EPS estimates in each of the trailing four quarters. TEX gained 133.6% in price over the past year and 34.1% year-to-date.
The company has an overall B rating, translating to Buy in our POWR Ratings system. In addition, TEX has an A grade for Growth and Value. The stock is ranked #12 among the 55 stocks in the Industrial – Building Materials industry.
Get additional POWR Ratings for Sentiment, Stability, Momentum, and Quality, here.
Note that TEX is one of the few stocks handpicked by our Chief Value Strategist, David Cohne, currently in the POWR Value portfolio. Learn more here.
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AGCO shares were trading at $128.01 per share on Friday afternoon, down $1.11 (-0.86%). Year-to-date, AGCO has gained 27.95%, versus a 19.95% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...
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