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Deere (DE) Earnings Miss, Sales Beat Estimates in Q2, Up Y/Y
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Deere & Company (DE - Free Report) reported third-quarter fiscal 2022 (ended Jul 31, 2022) earnings of $6.16 per share, missing the Zacks Consensus Estimate of $6.64. The bottom line increased 16% from the prior-year quarter’s levels.
Net sales of equipment operations (comprising Agriculture and Turf, Construction and Forestry) were $13 billion, up 25% year over year. Revenues beat the Zacks Consensus Estimate of $12.9 billion. Total net sales (including financial services and others) were $14.1 billion, up 22% year over year.
Operational Update
The cost of sales in the reported quarter was up 26% year over year to $9,511 million. Total gross profit in the reported quarter increased 18% year over year to $2,539 million. Selling, administrative and general expenses rose 14% to $959 million from the prior-year period’s levels.
Total operating profit (including financial services) was up 18% year over year to $2,646 million in the fiscal third quarter.
The Production & Precision Agriculture segment’s sales rose 43% year over year to $6,096 million, primarily owing to higher shipment volumes and price realization. Operating profit in the segment increased 43% year over year to $1,293 million.
Small Agriculture & Turf sales rose 16% to $3,635 million from the year-earlier quarter’s levels due to higher shipment volumes and price realization, partially offset by the unfavorable impact of currency translation. The segment’s operating profit fell 5% year over year to $552 million.
Construction & forestry segment sales were $3,269 million, up 8% year over year, backed by price realization. The segment’s operating profit was up 11% year over year to $514 million.
Net revenues in Deere’s Financial Services division were $903 million in the reported quarter compared with the prior-year quarter’s $902 million. The segment’s operating profit amounted to $287 million, down 1% year over year.
Financial Update
Deere reported cash and cash equivalents of $4,359 million at the end of third-quarter fiscal 2022 compared with $7,519 million recorded at the end of the year-ago quarter. Cash generated from operating activities was $418 million in the first nine months of fiscal 2022 compared with $4,314 million in the prior-year period. At the end of the quarter, the long-term borrowing was nearly $32 billion, remaining the same year over year.
Outlook
Deere expects net income for fiscal 2022 to be between $7.0 billion and $7.2 billion compared with the prior estimate of $7.0-$7.4 billion. Demand for farm and construction equipment will continue to be supported by positive fundamentals.
Price Performance
Deere’s shares have gained 4.7% in the past year compared with the industry’s growth of 3%.
Applied Industrial has an estimated earnings growth rate of 10.9% for fiscal 2023. In the past 60 days, the Zacks Consensus Estimate for fiscal 2023 earnings has been revised upward by 6%.
Applied Industrial pulled off a trailing four-quarter earnings surprise of 22.8%, on average. AIT’s shares have soared 32.2% in a year.
Greif has an estimated earnings growth rate of 37% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17%.
Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. GEF’s shares have risen 18.6% in the past year.
Sonoco has an expected earnings growth rate of 78.3% for 2022. The Zacks Consensus Estimate for the current year’s earnings moved up 18% in the past 60 days.
Sonoco has a trailing four-quarter earnings surprise of 4.06%, on average. SON’s shares have moved up 1.7% in the past year.
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Deere (DE) Earnings Miss, Sales Beat Estimates in Q2, Up Y/Y
Deere & Company (DE - Free Report) reported third-quarter fiscal 2022 (ended Jul 31, 2022) earnings of $6.16 per share, missing the Zacks Consensus Estimate of $6.64. The bottom line increased 16% from the prior-year quarter’s levels.
Net sales of equipment operations (comprising Agriculture and Turf, Construction and Forestry) were $13 billion, up 25% year over year. Revenues beat the Zacks Consensus Estimate of $12.9 billion. Total net sales (including financial services and others) were $14.1 billion, up 22% year over year.
Operational Update
The cost of sales in the reported quarter was up 26% year over year to $9,511 million. Total gross profit in the reported quarter increased 18% year over year to $2,539 million. Selling, administrative and general expenses rose 14% to $959 million from the prior-year period’s levels.
Total operating profit (including financial services) was up 18% year over year to $2,646 million in the fiscal third quarter.
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 rose 43% year over year to $6,096 million, primarily owing to higher shipment volumes and price realization. Operating profit in the segment increased 43% year over year to $1,293 million.
Small Agriculture & Turf sales rose 16% to $3,635 million from the year-earlier quarter’s levels due to higher shipment volumes and price realization, partially offset by the unfavorable impact of currency translation. The segment’s operating profit fell 5% year over year to $552 million.
Construction & forestry segment sales were $3,269 million, up 8% year over year, backed by price realization. The segment’s operating profit was up 11% year over year to $514 million.
Net revenues in Deere’s Financial Services division were $903 million in the reported quarter compared with the prior-year quarter’s $902 million. The segment’s operating profit amounted to $287 million, down 1% year over year.
Financial Update
Deere reported cash and cash equivalents of $4,359 million at the end of third-quarter fiscal 2022 compared with $7,519 million recorded at the end of the year-ago quarter. Cash generated from operating activities was $418 million in the first nine months of fiscal 2022 compared with $4,314 million in the prior-year period. At the end of the quarter, the long-term borrowing was nearly $32 billion, remaining the same year over year.
Outlook
Deere expects net income for fiscal 2022 to be between $7.0 billion and $7.2 billion compared with the prior estimate of $7.0-$7.4 billion. Demand for farm and construction equipment will continue to be supported by positive fundamentals.
Price Performance
Deere’s shares have gained 4.7% in the past year compared with the industry’s growth of 3%.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Deere currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Applied Industrial Technologies, Inc. (AIT - Free Report) , Greif Inc. (GEF - Free Report) and Sonoco Products Company (SON - Free Report) . While AIT sports a Zacks Rank #1 (Strong Buy), GEF & SON carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Industrial has an estimated earnings growth rate of 10.9% for fiscal 2023. In the past 60 days, the Zacks Consensus Estimate for fiscal 2023 earnings has been revised upward by 6%.
Applied Industrial pulled off a trailing four-quarter earnings surprise of 22.8%, on average. AIT’s shares have soared 32.2% in a year.
Greif has an estimated earnings growth rate of 37% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 17%.
Greif pulled off a trailing four-quarter earnings surprise of 22.9%, on average. GEF’s shares have risen 18.6% in the past year.
Sonoco has an expected earnings growth rate of 78.3% for 2022. The Zacks Consensus Estimate for the current year’s earnings moved up 18% in the past 60 days.
Sonoco has a trailing four-quarter earnings surprise of 4.06%, on average. SON’s shares have moved up 1.7% in the past year.