Deere Stock Gains After Solid Q3 Results

  • Deere & Company DE reported third-quarter net sales and revenue growth of 29.2% year-over-year to $11.53 billion, beating the consensus of $10.3 billion.
  • Equipment Operations net sales improved 32%, and the Equipment-division operating margin was 19%.
  • Sales by segments: Production & Precision Agriculture $4.25 billion (+29% Y/Y), Small Agriculture & Turf $3.15 billion (+32% Y/Y), and Construction & Forestry $3.02 billion (+38% Y/Y), Financial services revenues $902 million (+1% Y/Y) and Others $212 million (+22% Y/Y).
  • EPS improved to $5.32 from $2.57 in 3Q20, beating the consensus of $4.57.
  • Deere's operating profit increased by 61.4% Y/Y to $2.24 billion, and the margin expanded by 388 bps to 19.5%.
  • Deere generated cash from operating activities year-to-date of $4.31 billion, compared to $4.06 billion a year ago.
  • Recently, the company announced the acquisition of the Deere-Hitachi JV business for $275 million as consideration for the factories and intellectual property. The transaction is to be accretive to EPS in the first year.
  • FY21 Outlook: Deere expects net income attributable of $5.7 billion - $5.9 billion (prior $5.3 billion - $5.7 billion). Net operating cash flow from Equipment operations of $5.8 billion - $6 billion.
  • Price Action: DE shares are trading higher by 1.40% ay $363.99 during the premarket session on Friday.
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