Will Deere & Company Post Double-Digit Decline In Earnings? - Deere (NYSE:DE)

Deere & Company DE is scheduled to announce its second quarter financial results before the market opens on Friday and, according to Estimize, both experts and the crowd expect a marked year-over-year decline in earnings.

In the second quarter of 2014, the company reported earnings of $2.65 per share on revenue of $9.246 billion. For the current quarter, Wall Street analysts anticipate a 40 percent drop in earnings to $1.57 per share, and a 17 percent fall in revenue, to $7.601 billion.

The crowd is slightly less bearish than the Street, and projects earnings of $1.67 per share on revenue of $7.792 billion. Still, this implies a decline of almost 37 percent form the earnings registered a year ago.

However, two things should be noted from the chart above: (1) the earnings estimates imply a surge from last quarter’s earnings and (2) the company has a history of surpassing consensus estimates, so a beat this quarter would be no big surprise.

Also interesting to watch is the evolution of sentiment over time. As it can be appreciated in the chart overhead, consensus estimates have been falling as earnings got closer, and now stand at their lowest point.

The ‘Liquidity Crunch’

In a recent report that sent Deere’s stock on a downtrend, analysts at JPMorgan downgraded their rating on the stock from Neutral to Underweight, while trimming their price target from $90 to $84.

In the report the firm noted, "We recently spent some time in the Midwest meeting various agriculture industry participants including dealers, farmers and industry experts. We believe it was clear from what we heard that the industry is currently in dire straits with the potential for a liquidity crunch for farmers into 2016."

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