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Tale of the Tape

Zacks Equity Research

Deere & Company (DE) Beats Earnings, Revenues in Q4
November 23, 2016

DE

Trades from $3

Deere & Company (DE - Free Report) is the world’s leading manufacturer of agricultural machinery with a market capitalization of $28.93 billion. It also produces a variety of commercial and consumer equipment; and a broad range of construction and forestry equipment. Deere’s financial services primarily provide credit services, which mainly finance sales and leases of equipment by John Deere dealers and trade receivables purchased from the equipment operations.

The company, best known for its John Deere tractors, has been challenged with falling demand for agricultural equipment as lower crop prices take their toll on the U.S farm income. Nevertheless, in the long term the company stands to gain from favorable trends, supported by increasing population and rising living standards. Focus on investments in new products and geographies also remain tailwinds. An increase in non-residential construction spending activity and improvement in political conditions in Brazil will lead to better results. Further, favorable raw material costs as well as lower research and development, and selling, administrative and general expenses will boost margins.

Investors have thus been eagerly awaiting the company’s latest earnings report. Let’s have a quick look at the Illinois-based company’s fourth-quarter fiscal 2016 earnings release.

Estimate Trend & Surprise History

Investors should note that the earnings estimate for Deere for the fourth quarter fiscal 2016 has been remained stable over the past week and month. Coming to the earnings surprise, Deere has outpaced the Zacks Consensus Estimate in the trailing 4 quarters with an average beat of around 32.16%.

DEERE & CO Price and EPS Surprise
 

DEERE & CO Price and EPS Surprise | DEERE & CO Quote

Earnings

Deere posted earnings of 90 cents per share in the fourth quarter, beating the Zacks Consensus Estimate of 36 cents by a wide margin of 150%.

Revenues

Deere reported fourth quarter revenues from equipment operations of $5.650 billion, beating the Zacks Consensus Estimate of $5.354 billion.

Outlook

Deere projects total equipment sales to decline 1% year over year in fiscal 2017 and decline 4% in the first quarter of fiscal 2017, compared with year-ago periods. The projection includes a positive currency-translation effect of about 1% for the full year and 2% for the first quarter. For fiscal 2017, Deere expects net sales to dip 1% year over year and projects net income at $1.4 billion.

Zacks Rank

Currently, Deere has a Zacks Rank #2 (Buy) but that could change following Deere’s earnings report which was just released.

Market Reaction

Deere shares gained 2.85% in pre-market trading.

Check back later for our full write up on this Deere earnings report later!

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