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Deere (DE) to Report Q2 Earnings: What's in the Offing?

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Deere & Company (DE - Free Report) is scheduled to report second-quarter fiscal 2022 results on May 20, before the opening bell.

Which Way are the Estimates Trending?

The Zacks Consensus Estimate for Deere’s earnings per share is pegged at $6.63 for the fiscal second quarter, suggesting growth of 17% year over year. The Zacks Consensus Estimate for total revenues is pinned at $13.4 billion for the period, calling for a year-over-year improvement of 22%. Earnings estimates for the fiscal second quarter have moved down in the past 30 days.

Q1 Results

In the last reported quarter, Deere’s earnings and sales surpassed the Zacks Consensus Estimates. While the bottom line declined, the top-line figure increased year over year. The company has a trailing four-quarter earnings surprise of 20.6%, on average.

Let’s see how things have shaped up prior to this announcement.

Deere & Company Price and EPS Surprise

 

Deere & Company Price and EPS Surprise

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

 

What Does Our Model Indicate?

Our proven model doesn’t conclusively predict an earnings beat for Deere this season. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Deere is -1.37%.

Zacks Rank: Deere currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Factors to Consider

Higher agricultural commodity prices and pick-up in farm income have prompted farmers to boost spending on new agricultural equipment and replace the age-old ones. The preference for Deere’s products for their advanced technologies and features will likely reflect on fiscal first-quarter revenues. A robust order book driven by strong production and upbeat commodity prices is likely to have contributed to Deere’s performance during the quarter.

Cost management and benefits from footprint assessment are likely to have boosted the company’s margin in the to-be-reported quarter. However, rising raw material and logistics costs and uncertainties related to the COVID-19 pandemic might have affected quarterly performance.

Segment Estimates

The Zacks Consensus Estimate for Production & Precision Agriculture segment’s revenues is pegged at $5,912 million for the fiscal second quarter, suggesting year-over-year increase of 31%. The Zacks Consensus Estimate for the segment’s operating profit is pegged at $1,343 million, up 33% year over year.

Small Agriculture & Turf segment’s Zacks Consensus Estimate for revenues is pegged at $3,916 million for the fiscal second quarter, indicating a 16% growth from the prior-year quarter’s levels. The segment’s operating profit is estimated at $672 million, up 4% year over year.

The Construction & Forestry segment’s sales is estimated at $3,527 million in the fiscal second quarter, up 15% from the prior-year quarter’s levels. The segment’s operating profit is expected to increase 10% to $540 million from the prior-year quarter’s levels. The segment’s sales are expected to have benefited from strong demand for farm and construction equipment, continued strength in the housing market and increased oil and gas sector activity during the fiscal second quarter. Demand for earthmoving and compact construction equipment, particularly in North America, remains strong. Robust lumber demand is anticipated to have aided forestry sales during the quarter under review.

The Zacks Consensus Estimate for the Financial Services segment’s revenues is pegged at $891 million for the fiscal second quarter, up 10% from the year-ago quarter’s tally. The Zacks Consensus Estimate for the segment’s operating profit is pegged at $313 million.

Price Performance

Deere’s shares have declined 4.4% in the past year compared with the industry’s loss of 6.3%.

Zacks Investment Research
Image Source: Zacks Investment Research

Stocks Worth a Look

Here are some stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

Costco Wholesale Corporation (COST - Free Report) has an Earnings ESP of +1.90% and a Zacks Rank #2. The Zacks Consensus Estimate for the company’s revenues of $51.7 billion for the third quarter of fiscal 2022 indicates year-over-year growth of 14.3%.

The Zacks Consensus Estimate for the company’s third-quarter fiscal 2022 earnings is currently at $3.04, suggesting year-over-year growth of 10.6%. COST’s earnings topped the consensus mark in each of the trailing four quarters, the average surprise being 13.3%.

Star Bulk Carriers Corp. (SBLK - Free Report) currently has an Earnings ESP of +1.77% and a Zacks Rank of 2. The Zacks Consensus Estimate for Star Bulk Carriers’ first-quarter 2022 earnings is pegged at $1.41 per share, suggesting a 291.6% surge from the year-ago quarter’s levels.

The Zacks Consensus Estimate for its quarterly revenues is pegged at $339 million, suggesting year-over-year growth of 69%.

Advance Auto Parts, Inc. (AAP - Free Report) currently has an Earnings ESP of +4.89% and a Zacks Rank #3. The Zacks Consensus Estimate for Advance Auto Parts’ first-quarter 2022 earnings per share is currently pegged at $3.50, indicating 4.8% growth from the prior-year quarter’s tally.

The Zacks Consensus Estimate for AAP’s quarterly revenues is pegged at $3.4 million, which indicates year-over-year growth of 1.3%. The company has a trailing four quarters earnings surprise of 11%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.