Ag Growth International (AFN): Q3 2025 Stock Surge Analysis and Valuation Assessment

Based on my comprehensive analysis of Ag Growth International’s (TSX: AFN) Q3 2025 results and market reaction, I can provide a detailed assessment of the drivers behind the 28% stock surge and valuation sustainability within the agricultural equipment industry context.

---

Ag Growth International’s 28% stock surge following its Q3 2025 results was driven by a confluence of factors, including robust Commercial segment performance, strong international order growth (particularly in Brazil and LATAM), and management’s confirmation of full-year 2025 guidance. However, the sustainability of this valuation remains contingent upon the company’s ability to navigate ongoing headwinds in its Farm segment while maintaining momentum in its Commercial business amid a challenging agricultural equipment industry cycle [1][2].

---

The primary catalyst for the stock’s dramatic rise was the exceptional performance of AGI’s Commercial segment, which demonstrated remarkable resilience amid broader agricultural sector weakness:

Metric	Q3 2025	Q3 2024	YoY Change
Commercial Revenue	$255.5M	$172.6M	+48%
Commercial Adjusted EBITDA	$49.7M	$30.9M	+61%
Commercial Margin	19.5%	18.0%	+158 bps

This segment’s performance was driven by robust international project execution, particularly in Brazil and the broader Latin America region. The strategic initiatives implemented over recent years—including product transfers, emerging market expansion, and growth platforms—translated into measurable international growth and business resilience [1][2].

The company’s order book stood at

as of September 30, 2025, representing a 1% year-over-year increase. Notably, approximately was concentrated in the Commercial segment, providing visibility through the first half of 2026. This granular visibility was particularly valuable given the uncertainty prevailing in agricultural markets [1][2].

Subsequent to quarter-end, AGI secured over

across international markets, with aggregate value contributions expected to flow into both 2025 and 2026 results. This post-quarter momentum reinforced investor confidence in the company’s growth trajectory [1].

The company’s geographic revenue breakdown highlighted successful diversification away from North American Farm markets:

Geography	Q3 2025 Revenue	YoY Change
International	$205.6M	+54%
U.S.	$133.6M	-1%
Canada	$50.3M	-43%

International revenue now represents approximately

, compared to the prior year period. This diversification provides earnings stability and reduces dependence on North American farmer sentiment, which remains pressured by low commodity prices and input cost inflation [1][2].

Management maintained its full-year 2025 Adjusted EBITDA outlook of

, despite visible headwinds in the Farm segment. This commitment—against a backdrop of widespread sector earnings misses by peers—signaled confidence in the Commercial segment’s ability to offset Farm weakness. The market interpreted this as evidence that AGI’s strategic diversification is working as intended [1][2].

---

As of early January 2026, AGN’s valuation metrics present a mixed picture:

Metric	Current Value	Industry Comparison
Stock Price (CAD)	$23.67	—
Market Cap	$443.31M	Small-cap
Forward P/E	9.25	Attractive
Price/Sales (TTM)	0.33	Low
Price/Book (MRQ)	1.53	Reasonable
Enterprise Value/Revenue	0.99	Below historical avg.
1-Year Target (Avg.)	$38.80	+63.9% upside
Forward Dividend Yield	2.54%	—

The forward P/E of

represents a meaningful discount to historical averages and peers, reflecting market skepticism about earnings sustainability. However, the implies substantial upside from current levels [3][4].

Analyst consensus currently indicates a

rating with the following observations:

• Target price dispersion of
  24.96%
  suggests moderate disagreement among analysts
• 5 analysts covering the stock with targets ranging from $25.00 to $52.00
• Recent estimate revisions have been upward: full-year 2025 EPS estimates increased from $1.85 to $3.14 per share over the past 90 days [3][4]

---

The agricultural equipment industry is currently navigating a significant downturn:

• U.S. agricultural tractor sales declined nearly
  20%
  year-over-year as of November 2025
• Combine sales decreased by more than
  35%
• John Deere reported a
  12% revenue decrease
  to approximately $45 billion for full-year 2025
• CNH Industrial intentionally scaled back production of tractors and combines to avoid supply gluts

John Deere has projected that , with net income expected between $4.0 billion and $4.75 billion—below the Bloomberg consensus estimate of $5.31 billion. Bloomberg Intelligence analyst Chris Ciolino noted that Deere’s guidance "suggests a more severe and prolonged agricultural downturn than we initially anticipated, though it offers clarity on trough earnings this cycle" [5][6].

AGI’s Farm segment continues to face structural challenges:

Metric	Q3 2025	Q3 2024	YoY Change
Farm Revenue	$133.9M	$184.5M	-27%
Farm Adjusted EBITDA	$27.5M	$45.4M	-39%
Farm Margin	20.5%	24.6%	-409 bps

Management noted that

for the Farm segment, with challenging market conditions expected to persist. Key headwinds include:

• Low commodity prices compressing farmer income
• Tariff uncertainty affecting equipment purchasing decisions
• Rising input costs (seed, fertilizer, fuel)
• Subsidy policy uncertainty [1][2]

Despite near-term challenges, the agricultural machinery market’s long-term trajectory remains positive:

• Market size estimated at approximately
  $150 billion in 2025
• Projected
  5% CAGR
  through 2033
• Key growth drivers: technological innovation, precision farming adoption, increasing global food demand
• Leading players (John Deere, AGCO, CNH) investing heavily in R&D [7]

---

The Commercial segment’s strong order book (85% of backlog) provides earnings visibility through H1 2026, reducing execution risk and supporting premium valuation multiple expansion [1][2].

The 54% YoY growth in international revenue reduces dependence on North American farm economics and positions AGI to benefit from emerging market agricultural modernization [1].

Management has operationalized a new investment vehicle to monetize financing receivables, targeting a reduction in net debt leverage ratio from by year-end 2025. This should improve balance sheet flexibility and reduce financing costs [1].

At 9.25x forward earnings, AGN trades at a significant discount to historical multiples and peers, providing a margin of safety even if Farm segment earnings remain depressed [3][4].

A 27% revenue decline in the Farm segment raises questions about the durability of earnings in AGI’s core North American markets. If commodity prices remain low, farmer equipment purchasing may remain muted through 2026 [1][2].

The net debt leverage ratio of (up from 3.1x YoY) remains elevated. Higher debt servicing costs could constrain investment flexibility during the downturn [1].

With major peers like Deere and CNH signaling trough conditions in 2026, the agricultural equipment sector may face continued earnings pressure before recovery. AGN is not immune to sector-wide dynamics [5][6].

The Commercial segment’s growth depends on successful execution of large-scale international projects. Delays, scope changes, or currency fluctuations could impact projected earnings [1][2].

---

Risk Factor	Impact	Mitigation
Commodity price depression	High	International diversification
Farm segment visibility	High	Commercial backlog strength
Currency volatility (Brazil/LATAM)	Medium	Natural revenue hedging
Leverage levels	Medium	Brazil receivables monetization
SG&A cost inflation	Medium	Operational efficiency initiatives
Industry cycle extension	High	Long-term structural growth drivers

---

Management expects

due to challenging market conditions, negative product mix, and notably higher SG&A costs relative to the prior year. This suggests the stock may experience near-term volatility as the market digests quarterly results [1][2].

The Commercial segment’s visibility through H1 2026, combined with an expected bottoming of the agricultural equipment cycle, positions AGI for potential multiple expansion. The company’s differentiated financing tools and established presence in Brazil provide competitive advantages in capturing large-scale project opportunities [1][2].

The agricultural machinery market’s projected 5% CAGR through 2033, combined with AGI’s strategic positioning in emerging markets, supports a constructive long-term thesis. However, investors should monitor Farm segment recovery trajectories and leverage reduction progress.

---

Ag Growth International’s 28% stock surge following Q3 2025 results was fundamentally justified by the Commercial segment’s exceptional performance, strong international order growth, and management’s reaffirmation of full-year guidance. The stock’s current valuation at

appears reasonable given the earnings visibility provided by the Commercial backlog and the potential for sector cycle improvement in 2026.

1. The stock surge was driven by Commercial segment outperformance (+48% revenue, +61% EBITDA) and international diversification (54% revenue growth)
2. Order book strength ($667M, 85% Commercial) provides earnings visibility through H1 2026
3. Current valuation metrics suggest a margin of safety, with 64% average analyst upside potential
4. Sustainability depends on Farm segment stabilization and successful leverage reduction
5. Industry cycle appears to be approaching a trough, with 2026 potentially marking a recovery inflection point

Investors should note management’s guidance for lower Q4 2025 Adjusted EBITDA and limited visibility in the Farm segment. The agricultural equipment cycle remains in a trough phase, and further near-term volatility should be expected.

---

[1] AGI Announces Third Quarter 2025 Results & Conference Call - Business Wire (https://www.businesswire.com/news/home/20260108648397/en/AGI-Announces-Third-Quarter-2025-Results-Conference-Call)

[2] AGI Announces Third Quarter 2025 Results & Conference Call - Financial Times Markets (https://markets.ft.com/data/announce/detail?dockey=600-202601081933BIZWIRE_USPRX____20260108_BW648397-1)

[3] Ag Growth International Inc. (AFN.TO) Stock Price, News, Quote & Statistics - Yahoo Finance (https://finance.yahoo.com/quote/AFN.TO/)

[4] Ag Growth International Inc. Stock Valuation - Simply Wall St (https://simplywall.st/stocks/ca/capital-goods/tsx-afn/ag-growth-international-shares/valuation)

[5] Farm equipment market hits bottom after tough year - Farm Progress (https://www.farmprogress.com/farming-equipment/farm-equipment-market-hits-bottom-after-tough-year)

[6] Deere’s 2026 Outlook Suggests No Farm Economy Uptick - Agriculture.com (https://www.agriculture.com/partners-deere-s-2026-outlook-suggests-no-farm-economy-uptick-11859649)

[7] Agricultural Machinery Equipment Market Analysis 2025-2033 - Market Report Analytics (https://www.marketreportanalytics.com/reports/agricultural-machinery-equipment-121613)