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Kubota, a legendary company in Japan, is facing headwinds due to dealer inventory adjustments and weaker sales but has an attractive valuation. The company is strong in small farming and industrial equipment and has a competitive moat with a global dealer network and strong brand. Kubota has shown profitability even during difficult times and is focusing on improving profit margins and returns on capital.
Investors interested in Manufacturing - Farm Equipment stocks are likely familiar with Kubota Corp. (KUBTY) and Lindsay (LNN). But which of these two stocks offers value investors a better bang for their buck right now?
Kubota continues to outperform despite demand outlook concerns across its key end markets. With the raised guidance offering a limited margin of safety, caution is warranted. Valuations aren't cheap here either, and I remain cautious at these levels.
Kubota posted strong sales growth, thanks in part to the pass-through of higher raw material costs due to higher inflation. Despite strong sales growth and favorable exchange rates, operating income declined.
Here is how Kubota Corp. (KUBTY) and Mitsui & Co. (MITSY) have performed compared to their sector so far this year.
While demand in the Zacks Manufacturing - Farm Equipment industry will be supported by higher commodity prices, supply chain issues and high costs ail. Stocks like DE, KUBTY, AGCO and TWI are betting on cost management and automation to drive margins.