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Freedom251 › Blog › AGCO

How to Compare Agricultural Equipment Companies Using Financial Statements

By Freedom251 Team · · 14 min read

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The cleanest comparison of Deere & Company, CNH Industrial N.V., and AGCO Corporation is not a ranking of headline sales or net income. Build a like-for-like view of their equipment operations, isolate captive finance, decompose revenue changes into volume, price, mix, currency and portfolio effects, then test margins, cash conversion, leverage and returns across a full agricultural cycle.

This method matters because a manufacturer’s consolidated statements combine several risk pools. Factory inventory, dealer receivables, finance-company loans, operating leases and finance-subsidiary debt do not behave alike. A company can report a strong industrial margin while credit losses rise, or show weak earnings in a demand trough while preserving cash and balance-sheet flexibility.

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Start with the right peer set and scope

For a large-cap agricultural-equipment comparison, begin with Deere, CNH Industrial and AGCO. AGCO’s 2024 annual report identifies Deere and CNH as its two principal worldwide competitors. That is a useful starting universe, not a claim that every business line, geography or customer is identical.

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Write down the scope before opening a spreadsheet. Decide whether the analysis covers agriculture only or also construction, road building, compact equipment, precision technology, parts and services. Decide whether the comparison is for the parent company, industrial operations, or equity value after the finance subsidiaries are included. Record the fiscal year and currency for every observation.

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Company Why it belongs in the core set Scope questions to record
Deere & Company Large global agricultural-equipment manufacturer with industrial operations and a captive finance business. Separate equipment operations from financing receivables, finance debt and equipment on operating leases. Note how agriculture, construction and precision businesses are presented.
CNH Industrial N.V. Global agriculture and construction manufacturer with a consolidated finance activity. Record segment definitions, currency, accounting basis and the effect of market-driven volume declines, discounts and credit-loss provisions.
AGCO Corporation Global agricultural-equipment manufacturer whose annual report names Deere and CNH as principal worldwide competitors. Adjust for the divestiture of most of Grain & Protein in November 2024 when comparing 2025 with prior years.

Add other manufacturers only when the business model is genuinely comparable or when a narrow product comparison requires it. A construction-heavy company can distort an agriculture-cycle analysis; a component supplier can have different capital intensity and warranty economics.

Align the accounting before comparing numbers

A ratio is only comparable when its numerator and denominator describe the same economic perimeter. Create a one-page “basis of comparison” for each filing with these fields:

  • Fiscal year-end date and the number of months in the reporting period.
  • Reporting standard, such as U.S. GAAP or IFRS, and any company-defined non-GAAP measures.
  • Presentation currency and the exchange-rate convention used for translation.
  • Segment names, segment boundaries and intersegment eliminations.
  • Acquisitions, divestitures, discontinued operations and major reclassifications.
  • Whether finance subsidiaries are consolidated and how their debt, receivables and interest income are displayed.
  • One-time restructuring, impairment, litigation, tax and pension items included in reported earnings.

AGCO’s 2025 results illustrate why this step cannot be skipped. The company divested most of its Grain & Protein business in November 2024. That transaction changes the businesses represented in the 2025 and 2024 periods, so a simple year-over-year percentage can mix an operating change with a portfolio change.

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Do not silently convert a reported figure into a different basis. Keep a column for the company’s reported amount, a column for your adjustment, and a third column explaining the reason. If a comparable figure is not disclosed, mark it “not stated” and preserve the gap rather than estimating it from an unrelated line.

Decompose revenue into what actually changed

Revenue growth is an outcome, not an explanation. For each company and segment, reconcile the prior period to the current period using the bridge disclosed in the annual report or earnings release:

  1. Start with prior-period sales in the same currency and perimeter.
  2. Add or subtract volume and production changes.
  3. Separate list-price changes from discounts, incentives and dealer support.
  4. Identify mix: product size, model, option content, geographic mix and channel mix.
  5. Show currency translation separately from underlying operations.
  6. Remove or add acquisitions, divestitures and discontinued operations.
  7. Reconcile the bridge to reported sales and investigate any residual.
Revenue driver Question to answer Why it matters
Volume Did units produced or shipped rise or fall, and was the change caused by end demand, dealer inventories or factory scheduling? Volume pressure usually affects factory absorption, labor utilization and supplier commitments.
Price Did list prices increase, and did discounts or incentives offset those increases? Price realization shows whether the company can protect gross profit during inflation or weak demand.
Mix Did customers buy larger machines, higher-specification models, precision systems or lower-priced products? Mix can lift revenue and margin without unit growth, or hide a decline in core demand.
Currency How much of the reported change came from exchange-rate translation? Currency can make a stable local business look weak or strong in the reporting currency.
Portfolio What sales came from acquisitions, divestitures or discontinued operations? Portfolio effects are not organic execution and should not be treated as such.

CNH’s 2024 reporting demonstrates the need to read the bridge alongside the income statement. The company said unfavorable market conditions reduced sales volumes and production and increased sales discounts and credit-loss provisions. Those effects touch revenue, factory utilization and financial risk at the same time; treating the period as merely a “sales decline” misses the mechanism.

Separate equipment economics from the captive finance arm

Manufacturers often consolidate a finance subsidiary because they control it. Consolidation is appropriate for reporting, but it can obscure the economics an analyst is trying to compare. Build two views: industrial operations and financing operations, followed by a consolidated reconciliation.

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Industrial operations

For equipment operations, collect net sales, cost of sales, gross profit, operating income, operating margin, inventory, trade receivables, accounts payable, capital expenditure and operating cash flow. Include parts, service and precision businesses according to the company’s segment presentation. Their recurring or installed-base characteristics can differ materially from original-equipment sales.

Financing operations

For the captive finance arm, collect finance receivables, interest income, interest expense, provision or allowance for credit losses, charge-offs, delinquency indicators, finance-subsidiary debt and the maturity profile of that debt. Also record equipment on operating leases when disclosed. Deere’s annual report separately presents trade receivables, financing receivables and equipment on operating leases, a useful model for keeping these pools visible.

Reconcile without double counting

Do not subtract finance debt from enterprise value while also treating the related finance receivables as excess cash-like assets unless the valuation framework explicitly handles both sides. Likewise, do not compare industrial operating margin for one company with consolidated margin for another. Use a bridge that shows industrial income, finance income, eliminations, taxes and the consolidated result.

Finance subsidiaries can support equipment sales by making machines affordable to dealers and farmers. That support is economically valuable, but it also transfers part of the cycle into credit losses and funding costs. A downturn can therefore hurt the same company through lower factory volume, larger discounts, slower receivables and higher provisions.

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Compare operating profitability on a consistent basis

Begin with reported operating income and reported operating margin. Then present adjusted operating income only when every adjustment is listed and reconciled to the reported figure. A margin that excludes restructuring in one year but includes it in another is not a trend.

Profitability measure Calculation Use Main caution
Reported operating margin Reported operating income ÷ reported sales Shows the result actually recorded for the period. Can be affected by portfolio changes, impairments and unusual items.
Adjusted operating margin Adjusted operating income ÷ comparable sales Helps isolate recurring operations when adjustments are transparent. Requires a reconciliation; adjustments can be subjective.
Industrial margin Industrial operating income ÷ industrial sales Compares manufacturing economics without finance spreads. Segment allocations and eliminations may differ by company.
Finance spread Finance interest income minus finance interest expense, before credit losses Shows the funding spread earned by the finance arm. Must be read with provisions, charge-offs, liquidity and capital requirements.
Incremental margin Change in operating income ÷ change in sales Tests operating leverage during growth or contraction. Unreliable when acquisitions, divestitures or a very small denominator dominate.

Read gross margin and operating margin together. A company may preserve gross margin through pricing but lose operating margin because factories are underutilized. Conversely, a lower gross margin can accompany a favorable product mix while fixed-cost absorption improves. Explain the bridge rather than relying on a single percentage.

Test working capital and cash conversion

Agricultural equipment is seasonal. Inventory can build before planting or harvest seasons, and receivables can rise when dealers stock machines ahead of deliveries. AGCO states that its financing requirements vary with seasonal inventory and receivable levels. Compare the same quarter or use a full-year average rather than interpreting a single year-end balance as a permanent level.

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Core operating metrics

  • Inventory days: average inventory ÷ cost of sales × 365. Use average beginning and ending inventory where available.
  • Trade-receivable days: average trade receivables ÷ sales × 365. Keep trade receivables separate from finance receivables.
  • Payables days: average trade payables ÷ cost of sales × 365, while checking whether supplier-finance programs change the presentation.
  • Cash conversion cycle: inventory days + receivable days − payable days.
  • Operating cash-flow conversion: operating cash flow ÷ operating income or ÷ net income, with a note explaining working-capital movements.
  • Free cash flow: operating cash flow − capital expenditure. State whether the company’s definition includes finance-related cash flows or other exclusions.

Read the balance-sheet movements

When inventory rises, determine whether the cause is planned seasonal stocking, new-model launches, production ahead of orders, slower dealer sell-through or obsolete stock. Check inventory provisions and write-downs. When receivables rise, separate growth in equipment sales from longer payment terms, dealer stress and finance receivables. A strong sales quarter funded by looser credit is not equivalent to demand-led growth.

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Compare operating cash flow with earnings over several years. A temporary cash outflow can be healthy if it reflects a deliberate seasonal build that reverses with deliveries. Persistent earnings-to-cash shortfalls, rising inventory days and larger discounts are more concerning. During a downturn, cash conversion and credit losses can matter as much as operating margin.

Measure industrial and finance leverage separately

List gross debt, cash, net debt, maturities, interest expense, lease liabilities and pension obligations. Then identify which obligations sit in industrial entities and which belong to finance subsidiaries. Finance-company debt is generally matched to finance receivables, whereas industrial debt funds factories, research, inventory and shareholder distributions; the risks and liquidity needs differ.

Leverage item What to collect Interpretation
Industrial debt Short- and long-term borrowings, maturities, rates and covenants outside the finance arm. Measures funding risk for manufacturing and corporate activities.
Finance-subsidiary debt Borrowings matched to finance receivables, secured funding and maturities. Must be assessed against receivable quality, funding access and asset-liability matching.
Interest expense Industrial interest, finance interest and total interest, with the company’s classification. Shows sensitivity to rates and refinancing costs.
Credit losses Provision, allowance, charge-offs and delinquency trends. Indicates whether finance earnings are being consumed by borrower stress.
Leases and pensions Operating and finance leases, pension deficits and required contributions. Economic obligations can be understated if only funded debt is reviewed.

Calculate net debt only after deciding whether finance debt and finance receivables are included. For an industrial valuation, analysts may value the finance arm separately and subtract its debt, or use a consolidated approach. Either can work; mixing the two produces a false impression of leverage.

Read covenant headroom, committed credit facilities, commercial-paper dependence and debt maturities. A company with similar net debt today can face very different refinancing risk if one has a large maturity wall during a demand trough.

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Interpret results through the agricultural cycle

Do not rank companies from one peak or trough year. Agricultural demand responds to farm income, commodity prices, farmland values, debt levels and financing costs, acreage, yields, weather, input costs, government policy and subsidies. Dealer inventories and replacement timing can amplify or delay the effect on factory shipments.

Build a five- to ten-year history when filings permit. Plot sales, industrial margin, inventory days, operating cash flow, capital expenditure, credit losses and net debt. Mark unusual events such as major acquisitions, divestitures, factory closures, commodity shocks and changes in finance policy.

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Normalize the income statement

  1. Identify unusually high or low sales and margins relative to the company’s own history.
  2. Separate cycle effects from permanent changes in product mix, technology content, geographic exposure or cost structure.
  3. Use a mid-cycle revenue and margin range rather than the single highest or lowest year.
  4. Normalize tax rates, restructuring, impairment and pension items only when the adjustment is documented.
  5. Test whether the balance sheet can fund a downturn without forced asset sales, equity issuance or a sharp cut in investment.

Cycle normalization is not permission to invent an “average” year. Show the historical range, state the selected normalization rule and explain why it fits the company’s current portfolio. A business that has sold a division or added a high-margin precision operation may not be comparable with its older self.

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Finish with returns and valuation

Only after the operating and finance views are clean should you compare returns and valuation.

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Returns

  • ROIC: use operating profit after tax divided by invested capital, defining whether finance assets and finance debt are included.
  • Return on assets: useful for a consolidated view, but interpret separately for industrial assets and finance receivables.
  • Free-cash-flow yield: free cash flow divided by the relevant equity or enterprise value, with the company’s definition disclosed.
  • Incremental return: compare additional operating profit with the capital invested to support additional capacity, inventory and receivables.

Valuation

Use enterprise-value multiples only when enterprise value and earnings have the same perimeter. An industrial EV-to-operating-income multiple should not be paired with consolidated operating income that includes a finance arm unless the finance assets and debt are handled consistently. Equity multiples can be useful for the consolidated company, but they remain sensitive to finance leverage, tax, buybacks and credit losses.

Compare free-cash-flow yield, EV-to-normalized EBIT, price-to-earnings and, where appropriate, a sum-of-the-parts value for industrial operations and the finance subsidiary. Present a range based on normalized earnings rather than a false point estimate. State the valuation date, currency, share count convention and whether net debt includes leases, pensions and finance debt.

A repeatable filing-analysis workflow

  1. Define the question. Choose industrial execution, credit risk, total shareholder return or valuation; one model can answer more than one question only if the perimeters remain clear.
  2. Collect the filings. Use the latest annual report and the most recent interim reports for Deere, CNH and AGCO. Preserve reported currencies and units.
  3. Create a basis sheet. Record fiscal year-end, accounting standard, segment definitions, portfolio transactions and discontinued operations.
  4. Build a segment revenue table. Include agriculture, construction, precision technology, parts and services, and finance where disclosed.
  5. Construct revenue bridges. Attribute changes to volume, price, mix, currency and portfolio effects; reconcile to reported sales.
  6. Split industrial and finance statements. Map sales, operating income, receivables, debt, interest, provisions and leases to the appropriate pool.
  7. Calculate profitability. Show reported margin first, then adjusted margin with a complete reconciliation.
  8. Analyze cash. Calculate inventory days, receivable days, cash conversion, capital expenditure and free cash flow, noting seasonality.
  9. Analyze leverage and credit. Review maturities, covenants, liquidity, finance receivable quality, provisions and charge-offs.
  10. Normalize the cycle. Use several years of history and document every adjustment for portfolio or accounting changes.
  11. Calculate returns and valuation. Match the numerator and denominator perimeter, then compare normalized ROIC, free-cash-flow yield and enterprise-value multiples.
  12. Write the conclusion as a trade-off. State which company has stronger volume resilience, pricing, cash conversion, finance risk and balance-sheet capacity, and identify the evidence that could change the conclusion.

What AGCO’s 2025 figures show about comparability

AGCO reported 2025 net sales of $10,082.0 million, down 13.5% from 2024. It also reported net income attributable to AGCO of $726.5 million in 2025, compared with a $(424.8) million loss in 2024. Those figures are worth quoting precisely, but they are not sufficient to declare an operating winner.

The 2025-versus-2024 comparison must be read alongside the November 2024 divestiture of most of AGCO’s Grain & Protein business. A reported sales decline can contain a portfolio effect, while the swing from a loss to profit can reflect changes in operating performance, unusual items, taxes, impairments or other disclosed components. The correct next step is to reconcile reported results to a continuing, comparable perimeter and then inspect segment margins, cash flow, inventory and finance exposure.

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AGCO 2025 disclosed figure How to use it in a comparison
Net sales: $10,082.0 million Use as the reported consolidated starting point; adjust the historical perimeter before calculating organic growth.
Change from 2024: down 13.5% Decompose into volume, price, mix, currency and the Grain & Protein divestiture rather than labeling the whole change demand-driven.
Net income attributable to AGCO: $726.5 million Check the income-statement bridge, tax rate, nonrecurring items and finance contribution before using it in a valuation multiple.
2024 net income attributable to AGCO: $(424.8) million Treat the year-over-year swing as a starting point for investigation, not proof of a permanent earnings level.

Common comparison mistakes and fixes

Using consolidated sales as a market-share proxy

Sales combine price, currency, mix, acquisitions and divestitures. Fix the problem by building the revenue bridge and comparing only like-for-like segments.

Ranking one-year operating margins

A peak replacement cycle can inflate margins, while a trough can make a structurally sound company look weak. Use a multi-year history and show the range.

Calling finance debt “bad debt”

Finance debt funds receivables that can generate interest income, but it adds liquidity and credit exposure. Separate the debt, receivables, funding cost and losses before judging it.

Ignoring discounts

List-price increases can coexist with lower realized prices when discounts expand. Read the company’s price and discount commentary with gross margin.

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Mixing accounting standards without disclosure

U.S. GAAP and IFRS can classify or measure items differently. Record the reporting basis and avoid implying precision that the filings do not support.

Treating seasonal working capital as a permanent deterioration

Compare equivalent dates, use averages and inspect the reversal in subsequent periods. A year-end snapshot can reflect planting or harvest timing.

Ignoring portfolio changes

AGCO’s Grain & Protein divestiture shows how a transaction can alter the comparison base. Recast continuing operations where the filing provides enough information, and label unavailable figures as not stated.

Using adjusted earnings without a bridge

Adjusted measures are useful only when reconciled to reported earnings and applied consistently across years and companies. Never use a management adjustment as if it were an independently defined accounting measure.

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A practical decision framework

After completing the model, score each company on eight separate axes rather than producing one unqualified winner:

  1. Normalized revenue and mix: stability of core agriculture sales and the contribution of parts, services and precision technology.
  2. Volume, price and mix resilience: ability to protect realized prices and margins when units decline.
  3. Operating profitability: reported and consistently adjusted industrial margins through the cycle.
  4. Working-capital discipline: inventory, trade receivables, dealer exposure and cash conversion.
  5. Free cash flow: operating cash generation after capital expenditure and the durability of that cash.
  6. Finance risk: receivable quality, credit losses, funding spread, maturities and liquidity.
  7. Returns and capital intensity: ROIC or return on assets relative to factories, technology investment and working capital.
  8. Cycle-adjusted valuation: price paid for normalized earnings and cash flow, with finance assets and debt treated consistently.

The result should read like an investment case with explicit trade-offs: for example, stronger industrial margins may come with greater finance exposure; lower current margins may reflect a trough but require evidence of cash resilience; a low multiple may be justified by weak credit quality or an unfavorable portfolio change. Financial statements cannot remove uncertainty, but a disciplined perimeter and bridge can prevent the most common analytical errors.

Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.

AGCOagricultural equipmentCNH IndustrialDeerefinance subsidiariesfinancial statement analysisindustrial companiesvaluation

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