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Deere & Company (DE) Beats Q3 Earnings, Sales Lag

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Deere & Company (DE - Free Report) is the world’s leading manufacturer of agricultural machinery with a market capitalization of $24 billion. It also produces a variety of commercial and consumer equipment; and a broad range of construction and forestry equipment. Deere’s financial services primarily provide credit services, which mainly finance sales and leases of equipment by John Deere dealers and trade receivables purchased from the equipment operations.

The company, best known for its John Deere tractors, has been challenged with falling demand for agricultural equipment as lower crop prices take their toll on the U.S farm income. Deere has thus resorted to production cutbacks, lay-offs, along with seasonal plant shutdowns to remain profitable in the wake of lower sales. On the contrary, Deere expects to be solidly profitable driven by long-term favorable market trends. Improvement in political conditions in Brazil and a positive Indian agricultural outlook will also drive growth.

Investors have thus been eagerly awaiting the company’s latest earnings report. Let’s have a quick look at the Illinois-based company’s third-quarter fiscal 2016 earnings release.

Estimate Trend & Surprise History

Investors should note that the earnings estimate for Deere for the third quarter has been revised upward over the past week and month. Coming to the earnings surprise, Deere has outpaced the Zacks Consensus Estimate in the trailing 4 quarters with an average beat of around 17.39%.

DEERE & CO Price and EPS Surprise

 

DEERE & CO Price and EPS Surprise | DEERE & CO Quote

Earnings

Deere posted in earnings of $1.55 per share in the third quarter, beating the Zacks Consensus Estimate of 95 cents. Earnings increased 1.3% year over year.

Revenues

Deere reported third quarter revenues of $5.861 billion, falling short the Zacks Consensus Estimate of $5.996 billion.

Key Stats/Developments to Note

Deere projects total equipment sales to decline 10% year over year in fiscal 2016 and to be down about 8% in the fourth quarter of fiscal 2016 compared with year-ago periods. The projection includes a negative currency-translation effect of about 2% for the full year and a positive translation effect of about 1% for the fourth quarter. For fiscal 2016, net income attributable to Deere & Company is anticipated to be about $1.35 billion.

Zacks Rank

Currently, Deere has a Zacks Rank #3 (Hold) but that could change following Deere’s earnings report which was just released.

Market Reaction

Deere shares were inactive following the release. It would be interesting to see how the market reacts to the results during the trading session today.

Check back later for our full write up on this Deere earnings report later!

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