Market Overview

Deere Trades Higher Despite Q4 Miss

Deere Trades Higher Despite Q4 Miss

Deere & Company (NYSE: DE) reported  fiscal fourth-quarter results Wednesday that fell short of what analysts were expecting. The report sent shares of Deere lower by 3 percent premarket; the stock was trading up 4.73 percent at $144.99 at the time of publication. 

What Happened

Deere said it earned $2.30 per share in the Q4 on revenue of $8.34 billion, which missed the Street's forecast of $2.45 per share and $8.58 billion. By segment, agriculture and turf equipment rose 3 percent from a year ago and 15 percent for the year, while construction and forestry sales rose 65 percent for the quarter and 78 percent for the year.

Why It's Important

Deere & Co. CEO Samuel Allen said the company benefited from "further improvement in market conditions and a favorable customer response" to its portfolio of advanced products. The farm machinery business was boosted by the company's Wirtgen road-building business, which performed better than expected, he said. 

Deere has also continued to see cost pressures for raw materials such as steel, the CEO said, adding that the company is addressing price inflation through pricing actions and cost management.

What's Next

Looking to the new fiscal year, Deere said it expects to see a 7-percent gain in equipment sales, although foreign currency rates are likely to have an unfavorable impact of around 2 percent. Net sales and revenues are expected to rise 7 percent, while net income is guided to be around $3.6 billion.

"In our view, the company remains well-positioned to capitalize on growth in the world's agricultural and construction equipment markets," Allen said. "The replacement cycle for farm machinery is very much alive, despite tensions over global trade and other geopolitical issues."

Related Links:

Goldman Sachs Turns Cautious On Machinery Stocks

Morgan Stanley Overweight On WABCO, Deere, Caterpillar, United Rentals Among Machinery Stocks


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