Agricultural equipment manufacturer and seller AGCO International (NYSE:AGCO) reported that first quarter 2012 profits jumped 50% thanks to a continued strong demand for the company's products. During the first quarter ending Mar. 31, 2012, AGCO reported net income of $120 million, or $1.21 a share compared with a net profit of $80 million, or 81 cents a share, in the first quarter of 2011. Revenue during the quarter rose about 26% to $2.27 billion from $1.8 billion a year ago.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Farming Profits
Shares in AGCO jumped roughly 6% as the earnings report surpassed analysts' earnings per share estimates of 86 cents a share, on revenue of $2.1 billion, respectively. Strong demand for the company's tractors, combines and other farm related equipment fueled the company's growth. Despite a pullback in agricultural commodity prices, corn prices remain attractive which helps boost farming profits. AGCO also benefited from its acquisition of GSI in 2011 which gave the company a foothold in grain storage, a fast growing segment of the overall agricultural industry. Acquisitions helped boost sales growth by about 11% but absent that growth, organic sales grew by an impressive 19.4%. While the strongest growth coming from the Middle East and Asia. AGCO also delivered strong growth results in Europe, which is not an easy task these days.

SEE: Surprising Earnings Results

Sunny Days Ahead
In addition to a pleasant quarterly report, AGCO said that 2012 full year results would exceed expectations. The company continues to invest capital in product development, and the company expects global industry sales to grow modestly in 2012. As a relatively small player, AGCO's growth should exceed the overall industry. It is near a $5 billion market cap company compared with over a $33 billion for industry giant Deere (NYSE:DE) and almost $66 billion for titan Caterpillar (NYSE:CAT). AGCO also trades for less than 9 times earnings compared with over 12 for Deere. Its closest peer maybe Netherlands based CNH Global (NYSE:CNH), approximately an $11 billion maker and seller of farm equipment. CNH trades for almost 11 times earnings.

SEE: Understanding The P/E Ratio

The Bottom Line
Overall, agricultural equipment demand should remain fundamentally stronger going forward, at least for AGCO. AGCO is targeting adjusted earnings per share of approximately $5.50 for the full year of 2012. Net sales are expected to range from $10.2 billion to $10.5 billion for the full year.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Sham Gad did not own shares in any of the companies mentioned in this article.