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Deere (DE) Earnings & Sales Beat Estimates in Q3, '21 View Up

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Deere & Company (DE - Free Report) posted third-quarter fiscal 2021 (ended Jul 31, 2021) earnings of $5.32 per share, beating the Zacks Consensus Estimate of $4.49. The reported figure also surged 107% from the prior-year quarter.

Net sales of equipment operations (which comprise Agriculture and Turf, Construction and Forestry) came in at $10.4 billion, increasing 32% year over year. Revenues also surpassed the Zacks Consensus Estimate of $10.2 billion. Total net sales (including financial services and others) came in at $11.5 billion, up 29% year over year.

Operational Update

Cost of sales in the reported quarter was up 29.8% year over year to $7.6 billion. Total gross profit for the reported quarter jumped 28% year over year to $4 billion. Selling, administrative and general expenses flared up 11.8% to $841 million from the prior-year period. Equipment operations reported an operating profit of $1,952 million in the quarter compared with the $1,147 million witnessed in the year-earlier quarter. Total operating profit (including financial services) climbed 61% year over year to $2,243 million during the fiscal second 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 Production & Precision Agriculture segment’s sales were up 29% year on year to $4.2 billion, primarily driven by higher shipment volumes and price realization. Operating profit in the segment increased 50% year over year to $906 million.

Small Agriculture & Turf sales rose 32% to $3.1 billion from the year-earlier quarter on higher shipment volumes and price realization. This segment’s operating profit jumped 73% year over year to $583 million.

Construction & forestry segment sales came in at $3 billion, suggesting year-over-year growth of 38%, backed by higher shipment volumes and price realization. The segment’s operating profit surged 126% year on year to $463 million.

Net revenues in Deere’s Financial Services division came in at $902 million for the reported quarter, up 1% year on year. The segment’s operating profit came in at $291 million, up 20% year over year.

Financial Update

Deere reported cash and cash equivalents of $7.5 billion at the end of third-quarter fiscal 2021 compared with the $8.2 billion recorded at the end of the prior-year quarter. Cash generated from operating activities was $4,314 million in the first nine months of fiscal 2021 compared with $4,057 million in the prior year period. At the end of the fiscal third quarter, long-term borrowing was roughly $32 billion compared with the $34 billion witnessed at the end of the year-ago quarter.

Outlook

The company now expects net income for fiscal 2021 between $5.7 billion and $5.9 billion, up from the prior projection of $5.3 billion and $5.7 billion.

Price Performance

Deere’s shares have gained 34.1% so far this year, outperforming the industry’s growth of 29.9%.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank and Other Stocks to Consider

Deere currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the Industrial Products sector include Encore Wire Corporation (WIRE - Free Report) , Lindsay Corporation (LNN - Free Report) and Lincoln Electric Holdings, Inc. (LECO - Free Report) . All these companies sport a Zacks Rank #1, at present.

Encore Wire has a projected earnings growth rate of 332.6% for fiscal 2021. So far this year, the company’s shares have gained 45%.

Lindsay has an estimated earnings growth rate of 17.3% for the ongoing year. The company’s shares have rallied 35%, so far this year.

Lincoln Electric has an expected earnings growth rate of 45.1% for 2021. The stock has appreciated 22%, year to date.