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Deere (DE) Closes JV Deal With Hitachi, Buys Three Factories

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Deere & Company (DE - Free Report) entered into a new license and supply agreement with Hitachi Construction Machinery and ended the Deere-Hitachi joint venture (JV) manufacturing and marketing agreements. This new supply agreement will enable the company to offer a full range of excavators in the Americas. Last August, the company entered into this agreement.

Deere also acquired full ownership of three Deere-Hitachi JV factories, which will continue to manufacture only Deere-branded construction excavators and forestry equipment. These factories will no longer produce Hitachi-branded construction excavators and mining equipment.

Deere remains well poised for growth over the long term, backed by steady investments in new products and geographies. The company will benefit from a concerted focus on launching products with advanced technologies and features, which provides it a competitive edge. These investments will aid its customers to achieve improved profitability, productivity, and sustainability through the effective use of technology. It remains focused on revolutionizing agriculture with technology to make farming automated, easy to use and more precise across the production process.

The company is seeing strong demand from its new product launches like ExactRate planter applied fertilizer systems and AutoPath. ExactRate signifies the precision application of fertilizer, while AutoPath leverages Deere’s onboard technology linked to its operation center throughout a customer’s entire production cycle. AutoPath will strengthen automated farming in the future with its new features and technologies as part of the company’s Precision Agriculture software package strategies.

Last month, Deere reported first-quarter fiscal 2022 results. Earnings of $2.92 per share surpassed the Zacks Consensus Estimate of $2.28 but declined 25% from the prior-year quarter’s levels. Net sales increased 6% year over year to $8,531 million and beat the Zacks Consensus Estimate of $8,093 million.

Deere now expects net income for fiscal 2022 between $6.7 billion and $7.1 billion, up from the prior estimate of $6.5-$7 billion. Demand for farm and construction equipment will continue to be supported by positive fundamentals, including favorable crop prices, economic growth and increased infrastructure spending in fiscal 2022. However, rising raw material prices and logistic costs are likely to hurt Deere’s margin in fiscal 2022.

Price Performance

Deere’s shares have gained 3.5% in the past year compared with the industry’s loss of 0.3%.

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Zacks Rank & 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.

A few other top-ranked stocks in the Industrial Products sector include Applied Industrial Technologies, Inc. (AIT - Free Report) , Dover Corporation (DOV - Free Report) and Silgan Holdings Inc. (SLGN - Free Report) . While AIT sports a Zacks Rank #1, DOV and SLGN carrying a Zacks Rank #2 at present.

Applied Industrial Technologies reported adjusted EPS of $1.46 in second-quarter fiscal 2022 (ended Dec 31, 2020), up 49% year on year and beating the Zacks Consensus Estimate of $1.09. AIT has a trailing four-quarter earnings surprise of 27.9%, on average.

Applied Industrial Technologies has an expected earnings growth rate of 24.8% for fiscal 2022. The Zacks Consensus Estimate for fiscal year earnings has moved up 9.4% in the past 60 days. AIT’s shares have appreciated 20.2% in a year.

Dover’s fourth-quarter 2021 adjusted EPS increased 15% year over year to $1.78, beating the Zacks Consensus Estimate of $1.66. DOV has a trailing four-quarter earnings surprise of 12.3%, on average.

Dover has an estimated earnings growth rate of around 12.7% for 2022. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 5%. DOV’s shares have rallied around 32.1% in a year.

Silgan Holdings’ fourth-quarter 2021 adjusted EPS increased 32% year over year to a record 79 cents, beating the Zacks Consensus Estimate of 73 cents. SLGN has a trailing four-quarter earnings surprise of 3.8%, on average.

Silgan has a projected earnings growth rate of 13.5% for the current year. The Zacks Consensus Estimate for 2022 earnings has moved north by 3% in the past 60 days. In a year, SLGN has appreciated 11.7%.

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