AG Post Earnings Dip – Time To Buy

AG Post Earnings Dip – Time To Buy

Ag Growth (TSX:AFN) is a Winnipeg-based company that is engaged in the planning, engineering, and manufacturing of solutions and systems for the agricultural sector. Shares have dropped 18.6% over the past month as of close on August 16. The stock has fallen 4.7% in 2019.

The company released its second quarter 2019 results on August 8. Trade sales increased to $293 million compared to $262 million in Q2 2018 and for the first six months of the year they rose to $509 million.

Recent acquisitions have been a key driver for growth, but they did weigh on profit in the second quarter. Adjusted profit sank to $20.2 million compared to $22.2 million in Q2 2018. Adjusted profit per share dropped to $1.04 over $1.21 in the prior year.

Ag Growth’s recent acquisitions in India and France have made a positive impact on revenue, and the company should see a boost from these additions in the back half of 2019. Sales of commercial equipment were very strong in Canada as we have seen a good growing season.

The United States, on the other hand, has experienced record rains in the Midwest which have weighed on the sector. Fortunately, demand for equipment has remained high.

Shares of Ag Growth are now trading at the low end of its 52-week range, and the stock boasts a price-to-earnings ratio below 20. Ag Growth shares had an RSI of 21 at the time of this writing, putting it in technically oversold territory.

To top it off, the stock offers a monthly dividend of $0.2 per share which represents a tasty 5.5% yield. It is worth adding at a discount in August.

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Ivy Heffernan

Ivy Heffernan, student of Economics at Buckingham University. Junior Analyst at HeffX and experienced marketing director.

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