AGCO Corporation (NYSE: AGCO) and Wabco Holdings (NYSE:WBC) are both mid-cap industrial products companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, dividends, risk, valuation, profitability, analyst recommendations and institutional ownership.

Risk and Volatility

AGCO Corporation has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500. Comparatively, Wabco Holdings has a beta of 1.65, meaning that its stock price is 65% more volatile than the S&P 500.

Earnings and Valuation

This table compares AGCO Corporation and Wabco Holdings’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
AGCO Corporation $7.65 billion 0.70 $604.20 million $2.28 29.34
Wabco Holdings $2.93 billion 2.55 $479.40 million $6.00 23.26

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

Insider & Institutional Ownership

85.7% of AGCO Corporation shares are held by institutional investors. Comparatively, 96.4% of Wabco Holdings shares are held by institutional investors. 16.6% of AGCO Corporation shares are held by insiders. Comparatively, 0.8% of Wabco Holdings shares are held 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.

Dividends

AGCO Corporation pays an annual dividend of $0.56 per share and has a dividend yield of 0.8%. Wabco Holdings does not pay a dividend. AGCO Corporation pays out 24.6% of its earnings in the form of a dividend. Wabco Holdings has raised its dividend for 3 consecutive years.

Analyst Recommendations

This is a summary of current ratings and target prices for AGCO Corporation and Wabco Holdings, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AGCO Corporation 1 12 4 0 2.18
Wabco Holdings 1 2 8 0 2.64

AGCO Corporation presently has a consensus target price of $63.92, indicating a potential downside of 4.45%. Wabco Holdings has a consensus target price of $139.11, indicating a potential downside of 0.32%. Given Wabco Holdings’ stronger consensus rating and higher probable upside, analysts clearly believe Wabco Holdings is more favorable than AGCO Corporation.

Profitability

This table compares AGCO Corporation and Wabco Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AGCO Corporation 2.40% 6.84% 2.67%
Wabco Holdings 11.23% 40.21% 10.86%

Summary

Wabco Holdings beats AGCO Corporation on 12 of the 17 factors compared between the two stocks.

About AGCO Corporation

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 Wabco Holdings

WABCO Holdings Inc. is a supplier of electronic, mechanical, electro-mechanical and aerodynamic products for various manufacturers of commercial trucks, buses and trailers, as well as passenger cars. The Company engineers, develops, manufactures and sells braking, stability, suspension and transmission automation and air management systems primarily for commercial vehicles. Its products are pneumatic anti-lock braking systems, electronic braking systems, electronic stability control systems, brake controls, automated manual transmission systems, air disc brakes, and a range of conventional mechanical products, such as actuators, air compressors and air control valves for medium- and heavy-duty trucks, buses and trailers. The Company’s products also include air compressor and air processing/air management system; electronic and conventional air suspension systems; transmission automation; roll stability support; advanced driver assistance systems, and fleet management solutions.

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