Deere Posts Better-Than-Expected Results
Net income for Deere & Co. (NYSE: DE – $92.43) for the first quarter of fiscal 2015 was $386.8 million, or $1.12 per share, compared with $681.1 million, or $1.81 per share, for the same period last year. Worldwide net sales decreased 17% to $6.383 billion, vs. $7.654 billion a year ago. Analysts were predicting earnings per share closer to $0.84 on $5.53 billion in revenue. The decline in equipment sales and earnings for the quarter was due primarily to lower shipment volumes and the impact of a less favorable product mix, partially offset by lower selling and administrative and general expenses. The financial services division reported net income of $156.8 million for the quarter compared with $142.2 million last year. Company equipment sales are projected to decrease about 17% for fiscal 2015 and be down about 19% for the second quarter compared with year-ago periods. Included in the forecast is a negative currency-translation effect of about 3% for the full year and 4% for the second quarter. The Moline, Illinois-based company said that fiscal 2015 net income is anticipated to be about $1.8 billion. While management did not specifically guide earnings per share, the consensus for the year is $5.53. Last week, Warren Buffett’s Berkshire Hathaway disclosed a 5% stake in Deere worth $1.51 billion at year-end 2014, appearing to believe there is value in the shares. For those investors willing to wait out the downtown in farm spending over the next year or so, Deere holds decent total return potential to 2018-2020 with its 2.6% yield.