Conservative · Stocks to Consider and Updates

Deere Misses Estimates; Cuts Earning’s Outlook

Deere & Co. (NYSE: DE – $148.87) said sales from agricultural equipment fell in its latest quarter, as farmers scale back on major purchases amid concerns over crop conditions, uncertain near-term commodity demand and the trade war between the U.S. and China. Net sales of equipment decreased 3.4% from a year ago to $8.97 billion, pulling behind analysts’ estimates of $9.41 billion. Net sales and revenue in the Agriculture and Turf business fell 5.5% to $5.95 billion, while Construction and Forestry was up 1% to $3.02 billion. Overall third-quarter revenue, which includes Deere’s Finance business, slipped 2.6% to $10.04 billion. Excluding one-time items, the Moline, Ill. company made $2.71 a share compared to $2.59 per share last year as costs dropped 2.1% from a year earlier. Analysts expected per-share earnings of $2.83. For the first nine months of the year, net income was $2.532 billion, or $7.87 per share, compared with $1.584 billion, or $4.82 per share, for the same period last year. Despite the miss, shares of DE are higher by about 3.5% in early trading.

       The company expects equipment sales, which include business from its Wirtgen road paving equipment acquisition, to increase by 4% in fiscal 2019. Overall revenue is projected to rise by about 5%. Deere cut fiscal full-year net income guidance by about $100 million to $3.2 billion. Street estimates are for adjusted earnings of $10.22 per share and $11.57 next year. Conservative investors may want to look here. On a risk-adjusted basis, Deere stock, yielding 2.1%, holds decent 3- to 5-year total return potential.

 

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