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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 2020 results on May 22, before the opening bell.

Which Way are the Estimates Trending?

The Zacks Consensus Estimate for Deere’s earnings per share is pegged at $1.99 for the fiscal second quarter, suggesting a 43.5% year-over-year plunge. The Zacks Consensus Estimate for total revenues is pegged at $8.01billion for the period, indicating a year-over-year decline of 22%.

A Sneak Peak into Q1 Performance

In the last reported quarter, Deere’s earnings and revenues surpassed the Zacks Consensus Estimate. The company’s bottom line improved, while the top line declined year on year.

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

Key Factors to Consider   

The coronavirus pandemic is likely to have directly impacted Deere’s sales and the supply chain during the fiscal second quarter. The company’s road building business has a bigger exposure to China, with sales contributing 10-15% of the overall sales. Lack of activity in this area due to the virus outbreak might have impacted Deere’s quarterly revenues. Furthermore, some of Deere’s facilities have temporarily shut down and reduced their operations to contain the spread of coronavirus. This is likely to have dented the company’s performance during the period.

Cost management, footprint assessment and continued investment in innovative technology and solutions are likely to have supported the company’s margin. Moreover, replacement demand for old equipment will likely reflect on the to-be-reported quarter’s revenue numbers.

The Zacks Consensus Estimate for the Agriculture and Turf equipment segment’s quarterly net sales is currently pegged at $6,037 million, suggesting a decline of 17% from the year-ago quarter. The Agriculture and Turf equipment segment’s operating income is projected at $716 million, down from the prior-year quarter’s $1,019 million.

The Zacks Consensus Estimate for the Construction & Forestry segment’s sales is pegged at $2,257 million for the February-April period, suggesting a drop of 24.5% from the year-ago quarter’s figure. The Construction & Forestry segment is estimated to report an operating profit of $123 million, indicating a slump of 64.5% from the year-earlier quarter’s $347 million. The segment is anticipated to have seen a dismal fiscal second quarter due to sluggish construction activity and weak demand.

The Zacks Consensus Estimate for net sales of equipment operations (which comprise Agriculture and Turf, Construction and Forestry) is $8,294 million, calling for a decline of 19.3% from the year-ago quarter’s reported figure.

The Zacks Consensus Estimate for the Financial Services segment’s sales is pinned at $938 million, suggesting a 5.8% increase, year on year. The Zacks Consensus Estimate for the segment’s operating profit is currently pegged at $188 million, indicating a rise of 10.6% from the prior-year quarter.

Deere Company Price and EPS Surprise

Earnings Whispers

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 odds 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 0.00%. This is because currently the Most Accurate Estimate and the Zacks Consensus Estimate are both pegged at $1.99.
 
Zacks Rank: Deere currently carries a Zacks Rank of 4 (Sell).

Price Performance

Deere’s shares have gained 1.9% over the past year as against the industry’s decline of 2.2%.



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.

Alibaba Group Holding Limited (BABA - Free Report) has an Earnings ESP of +4.89% and holds a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Big Lots, Inc. (BIG - Free Report) has an Earnings ESP of +18.72% and carries a Zacks Rank #3, currently.

CBL & Associates Properties, Inc. (CBL - Free Report) has an Earnings ESP of +8.11% and is currently a Zacks #3 Ranked stock.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
 
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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