We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
John Deere Q2 Results Put Agribusiness ETFs in Focus
Read MoreHide Full Article
Before the opening bell on May 22, the world’s largest agricultural equipment maker, Deere & Co (DE - Free Report) reported better-than-expected second-quarter fiscal 2020 results but warned of the impact of COVID-19 on full fiscal sales (read: Follow Warren Buffett With 5 ETF Strategies & Tackle COVID-19).
Earnings per share came in at $2.11, well above the Zacks Consensus Estimate of $1.77 but lower than the year-ago earnings of $3.52. Revenues decreased 18% year over year to $9.25 billion but edged past the Zacks Consensus Estimate of $7.59 billion.
For fiscal 2020, the farm equipment giant expects total sales to fall sharply as the global coronavirus pandemic saps demand for agricultural and industrial equipment. Farm and turf equipment sales will likely decline 10-15% while construction and forestry equipment sales would slump by as much as 40%.
Market Impact
Despite the solid results, shares of DE fell 1.5% on the day of its earnings announcement. Currently, John Deere has a Zacks Rank #4 (Sell) and a VGM Score of A. This has put ETFs with the largest allocation to this farm equipment giant in focus for the weeks ahead. Below, we have highlighted some of those funds (see: all Materials ETFs here).
iShares MSCI Global Agriculture Producers ETF (VEGI - Free Report)
This fund provides global exposure to 140 companies that produce fertilizers and agricultural chemicals, farm machinery, packaged foods and meats by tracking the MSCI ACWI Select Agriculture Producers Investable Market Index. Holding 140 stocks in its basket, Deere takes the top spot at 14.6% share. American firms account for 48.1% of the assets while Norway, Japan, Canada and China round off the next four spots. The ETF is less popular and illiquid with $19.7 million in AUM and around 5,000 shares in average daily volume. It charges 39 bps in fees per year from investors.
First Trust Indxx Global Agriculture ETF (FTAG - Free Report)
This ETF follows the Indxx Global Agriculture Index, which is a market-capitalization weighted index, designed to measure the performance of companies, directly or indirectly engaged in improving the agricultural yields. It holds 46 stocks in its basket with John Deere occupying the third position at 9.2%. From the perspective of industrial exposure, chemicals take the largest share at 47.6% followed by 22.9% in machinery, equipment & components. Here again, the United States is the top country with 34.2% share while Germany and Japan round off the next two spots with double-digit exposure each. FTAG is an overlooked ETF, having accumulated $2.5 million in AUM and trading in average daily volume of under 1,000 shares. It charges 70 bps in annual fees.
With AUM of $40.2 million, this fund offers exposure to companies that are involved in the production and distribution of commodities and commodity-related products and services in the following sectors — Agriculture, Alternatives (Water & Alternative Energy), Base and Industrial Metals, Energy, Forest Products, and Precious Metals. It tracks the VanEck Natural Resources Index, holding 307 stocks in its basket. John Deere takes the top spot at 7.3% of the assets. Here too, American firms dominate the portfolio with nearly 44.3% share, and materials is the top sector with 35%. The ETF charges 50 bps in annual fees and trades in average daily volume of 18,000 shares (read: Top & Flop ETFs at Half-Way Q2).
This fund is by far the most popular choice in the space with an AUM of about $521.6 million and average daily volume of 50,000 shares. It tracks the MVIS Global Agribusiness Index, which offers exposure to companies, involved in agri-chemicals, animal health and fertilizers, seeds and traits, farm/irrigation equipment and farm machinery, aquaculture and fishing, livestock, cultivation and plantations, and trading of agricultural products. The fund holds 52 securities in its basket with John Deere capturing the fourth position holding 6.8%. It charges 56 bps in annual fees.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
John Deere Q2 Results Put Agribusiness ETFs in Focus
Before the opening bell on May 22, the world’s largest agricultural equipment maker, Deere & Co (DE - Free Report) reported better-than-expected second-quarter fiscal 2020 results but warned of the impact of COVID-19 on full fiscal sales (read: Follow Warren Buffett With 5 ETF Strategies & Tackle COVID-19).
Earnings per share came in at $2.11, well above the Zacks Consensus Estimate of $1.77 but lower than the year-ago earnings of $3.52. Revenues decreased 18% year over year to $9.25 billion but edged past the Zacks Consensus Estimate of $7.59 billion.
For fiscal 2020, the farm equipment giant expects total sales to fall sharply as the global coronavirus pandemic saps demand for agricultural and industrial equipment. Farm and turf equipment sales will likely decline 10-15% while construction and forestry equipment sales would slump by as much as 40%.
Market Impact
Despite the solid results, shares of DE fell 1.5% on the day of its earnings announcement. Currently, John Deere has a Zacks Rank #4 (Sell) and a VGM Score of A. This has put ETFs with the largest allocation to this farm equipment giant in focus for the weeks ahead. Below, we have highlighted some of those funds (see: all Materials ETFs here).
iShares MSCI Global Agriculture Producers ETF (VEGI - Free Report)
This fund provides global exposure to 140 companies that produce fertilizers and agricultural chemicals, farm machinery, packaged foods and meats by tracking the MSCI ACWI Select Agriculture Producers Investable Market Index. Holding 140 stocks in its basket, Deere takes the top spot at 14.6% share. American firms account for 48.1% of the assets while Norway, Japan, Canada and China round off the next four spots. The ETF is less popular and illiquid with $19.7 million in AUM and around 5,000 shares in average daily volume. It charges 39 bps in fees per year from investors.
First Trust Indxx Global Agriculture ETF (FTAG - Free Report)
This ETF follows the Indxx Global Agriculture Index, which is a market-capitalization weighted index, designed to measure the performance of companies, directly or indirectly engaged in improving the agricultural yields. It holds 46 stocks in its basket with John Deere occupying the third position at 9.2%. From the perspective of industrial exposure, chemicals take the largest share at 47.6% followed by 22.9% in machinery, equipment & components. Here again, the United States is the top country with 34.2% share while Germany and Japan round off the next two spots with double-digit exposure each. FTAG is an overlooked ETF, having accumulated $2.5 million in AUM and trading in average daily volume of under 1,000 shares. It charges 70 bps in annual fees.
VanEck Vectors Natural Resources ETF (HAP - Free Report)
With AUM of $40.2 million, this fund offers exposure to companies that are involved in the production and distribution of commodities and commodity-related products and services in the following sectors — Agriculture, Alternatives (Water & Alternative Energy), Base and Industrial Metals, Energy, Forest Products, and Precious Metals. It tracks the VanEck Natural Resources Index, holding 307 stocks in its basket. John Deere takes the top spot at 7.3% of the assets. Here too, American firms dominate the portfolio with nearly 44.3% share, and materials is the top sector with 35%. The ETF charges 50 bps in annual fees and trades in average daily volume of 18,000 shares (read: Top & Flop ETFs at Half-Way Q2).
VanEck Vectors Agribusiness ETF (MOO - Free Report)
This fund is by far the most popular choice in the space with an AUM of about $521.6 million and average daily volume of 50,000 shares. It tracks the MVIS Global Agribusiness Index, which offers exposure to companies, involved in agri-chemicals, animal health and fertilizers, seeds and traits, farm/irrigation equipment and farm machinery, aquaculture and fishing, livestock, cultivation and plantations, and trading of agricultural products. The fund holds 52 securities in its basket with John Deere capturing the fourth position holding 6.8%. It charges 56 bps in annual fees.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>