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Deere's (DE) Earnings and Sales Surpass Estimates in Q4

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Deere & Company (DE - Free Report) posted fourth-quarter fiscal 2020 (ended Nov 1, 2020) earnings of $2.39 per share, beating the Zacks Consensus Estimate of $1.44. The reported figure also improved 5.3% from the prior-year quarter.

Net sales of equipment operations (which comprise Agriculture and Turf, Construction and Forestry) came in at $8.66 billion, declining 0.5% year over year. Revenues, however, surpassed the Zacks Consensus Estimate of $7.30 billion. Total net sales (including financial services and others) came in at $9.73 billion, down 1.7% year over year.

Operational Update

Cost of sales in the reported quarter was down 3.9% year over year to $6.4 billion. Total gross profit for the reported quarter improved 3.2%, year over year, to $3.3 billion. Selling, administrative and general expenses flared up 7% to $1,011 million from the prior-year quarter. Equipment operations reported an operating profit of $1,056 million in the quarter compared with the $788 million witnessed in the prior-year quarter. Total operating profit (including financial services) climbed 42.4% year over year to $1,305 million in the fiscal fourth quarter.

Deere & Company Price, Consensus and EPS Surprise

Deere & Company Price, Consensus and EPS Surprise

Deere & Company price-consensus-eps-surprise-chart | Deere & Company Quote

Segment Performance

The Agriculture & Turf segment’s sales were up 7.6% year on year to $6.19 billion, primarily owing to price realization and higher shipment volumes, partly offset by the unfavorable impact of currency translation. Operating profit in the segment surged 63% year over year to $860 million.

Construction & Forestry sales slid 16% to $2.46 billion from the year-earlier quarter on lower shipment volumes, partly masked by price realization. This segment’s operating profit slid 25% year over year to $196 million.

Net revenues in Deere’s Financial Services division came in at $891 million in the reported quarter, down 8% year on year. The segment’s operating profit came in at $249 million, significantly up a whopping 95% year over year.

Financial Update

Deere reported cash and cash equivalents of $7.1 billion at the end of fiscal 2020 compared with the $3.8 billion recorded at the end of prior fiscal year. Cash generated from operating activities were $7,483 million in fiscal 2020 compared with the prior fiscal year’s $3,412 million. At the end of fiscal 2020, long-term borrowing was roughly $33 billion, up from the $30 billion witnessed at the end of the previous fiscal year.

Fiscal 2020 Performance

Deere reported earnings of $8.69 per share in fiscal 2020, beating the Zacks Consensus Estimate of $7.74.

Net sales of equipment operations declined 10% year over year to $31.3 billion but surpassed the Zacks Consensus Estimate of $29.9 billion. Total net sales (including financial services and others) came in at $35.5 billion, down 9% year over year.

Outlook

The company expects net income for fiscal 2021 to be between $3.6 billion and $4 billion. Deere expects to benefit from the improving farm economy, and stabilization in the construction and forestry markets in fiscal 2021.

The company expects Agriculture and Turf equipment sales to be up 10-15% for fiscal 2021. The Construction and Forestry equipment segment’s sales are estimated to be up 5-10% for the fiscal year.

Price Performance

Deere’s shares have appreciated 76.6% over the past six months, outperforming the industry’s growth of 74.6%.



Zacks Rank & Other Stocks to Consider

Deere currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other top-ranked stocks in the Industrial Products sector are Crown Holdings, Inc. (CCK - Free Report) , iRobot Corporation (IRBT - Free Report) and SiteOne Landscape Supply, Inc. (SITE - Free Report) . While Crown Holdings and iRobot flaunt a Zacks Rank #1, SiteOne Landscape carries a Zacks Rank of 2, at present.

Crown Holdings has a projected earnings growth rate of 11.7% for fiscal 2020. Over the past six months, the company’s shares have appreciated 56.2%.

iRobot has an estimated earnings growth rate of 18.8% for the ongoing year. Shares of the company have gained 19.2% in the past six months.

SiteOne Landscape has an expected earnings growth rate of 28.6% for 2020. The stock has climbed 51.7% in six months’ time.

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