As murky as the outlook for farming and construction equipment is, Deere & Company's DE operational quality and capital return have its stock price on track to hit a fresh high soon. The critical details from the Q3 release include top and bottom-line strengths, favorable guidance despite challenging conditions, robust capital return, and a pledge to continue working on costs.  The takeaway is that Deere & Company's business contraction is severe but not as bad as expected, and the company is healthy enough ...

Deere is a cyclical stock worth holding through market cycles.Deere (DE 1.25%) stock has been under pressure as the peak of its earnings boom seems to be over. However, the agriculture, construction, and forestry original equipment manufacturer is still delivering impeccable results that have far exceeded pre-pandemic levels.Here's why Deere is an excellent dividend stock to buy around its two-year low, even if earnings growth clocks lower in the future. Deere is coming off a historic boomThe best way to ap ...

Scott Olson John Deere (NYSE:DE) reported Q3 results yesterday, delivering a double-digit beat vs consensus EPS and affirming its full year guidance of ~$7B in net income. Following several subsequent guidance downgrades in the previous quarters, this in our view removes a major overhang for shares. With valuation remaining cheap, this should drive shares to reprice on an expected 2025 agri cycle recovery, as argued by us in our initiation note. While retaining company-level guidance, management lowered ...

Deere & Company TodayDEDeere & Company$372.25 -1.01 (-0.27%) 52-Week Range$340.20▼$425.42Dividend Yield1.58%P/E Ratio11.21Price Target$422.78Add to WatchlistDeere & Company NYSE: DE shares bounced upward by more than 6% following a better-than-expected fiscal third-quarter earnings report, although the company continues to face significant industry headwinds. Cost-cutting measures have been successful insofar as the maker of agricultural and forestry equipment maintained its profit outlook for the year. How ...

Group 1 - The company reported better-than-expected third-quarter results with net sales declining 17% year-over-year to $13.152 billion, surpassing the consensus of $10.944 billion [1] - Earnings per share (EPS) was $6.29, down from $10.20 year-over-year, but exceeded the consensus estimate of $5.85 [1] - The company initiated involuntary employee-separation programs, incurring $124 million in pretax expenses, with an estimated total of $150 million [1] Group 2 - The company reaffirmed its 2024 net income outlook of $7.00 billion [1] - Expected declines in net sales for 2024 include Production & Precision Ag by ~20%-25%, Small Ag & Turf by 20%-25%, and Construction & Forestry by 10%-15% [1] - Financial services net income is projected to be $720 million for the fiscal year [1] Group 3 - Following the earnings announcement, Deere shares gained 6.3% to close at $373.26 [2] - Analysts from B of A Securities and Citigroup maintained a Neutral rating while raising their price targets to $410 and $395, respectively [2] - The consensus price target for Deere & Co is $427.1 based on 32 analysts, with a high of $551 and a low of $360 [4]

Core Thesis - The long-term bullish thesis for Deere & Company is based on factors such as population growth, declining global arable land, rising energy prices, and the necessity for farmers to invest in advanced technologies to enhance yields and reduce costs [2][28]. Financial Performance - In Q3 2024, Deere's net sales of equipment operations fell by 20% to $11.4 billion, with net income dropping by 42% and diluted EPS decreasing by 38% [9][10]. - The Production and Precision Ag segment experienced a 25% year-over-year decline in net sales, while the Small Ag and Turf segment saw an 18% decline [10][12]. - Despite the poor financial results, Deere's actual performance exceeded analyst expectations, with total revenues $2.4 billion higher than anticipated and EPS $0.65 above expectations [17]. Market Conditions - Current market challenges include low crop prices, high interest rates, and weak global manufacturing sentiment, which have led to reduced demand for agricultural equipment [14][21]. - The company is facing declining demand in key markets like North America and Brazil, exacerbated by high input costs and lower commodity prices [14][21]. Strategic Actions - Deere has proactively reduced production and inventory to align with demand, which helps avoid overproduction and supports pricing and margins [18][23]. - The company is focusing on integrating advanced technology into its product lineup, which is expected to enhance customer profitability and position Deere as a leader in agricultural innovation [21][22]. Future Outlook - Deere anticipates a 20-25% decline in net sales for its Production and Precision Ag and Small Ag and Turf segments, and up to a 15% contraction in its Construction and Forestry segment for the full year [21]. - The company maintains a strong balance sheet and is positioned for a rebound once economic conditions improve, particularly as aging equipment in North America creates replacement demand [22][27]. Investment Considerations - Deere's stock has historically performed well, returning approximately 400% over the past ten years, significantly outperforming the S&P 500 [6][8]. - The company has increased its dividend by 93% since 2020, reflecting a commitment to shareholder returns [4][28].

Financial Data and Key Metrics Changes - Net sales and revenues decreased by 17% to $13.152 billion, while net sales for equipment operations fell by 20% to $11.387 billion [9] - Net income attributable to Deere & Company was $1.734 billion, equating to $6.29 per diluted share [9] - Equipment operations margin stood at 18.5% [8] Business Segment Data and Key Metrics Changes - **Production and Precision Ag**: Net sales were $5.099 billion, down 25% year-over-year, with an operating profit of $1.162 billion and a 22.8% operating margin [10] - **Small Ag & Turf**: Net sales decreased by 18% to $3.053 billion, with an operating profit of $496 million and a 16.2% operating margin [11] - **Construction and Forestry**: Net sales fell by 13% to $3.235 billion, with an operating profit of $448 million and a 13.8% operating margin [15] Market Data and Key Metrics Changes - U.S. and Canada large Ag equipment industry sales are expected to decline approximately 15% [12] - In Europe, industry sales are forecasted to decrease by about 15% due to yield headwinds [13] - South America anticipates a decline in tractor and combine sales between 15% and 20% [13] - Asia's industry sales are projected to be down moderately [14] Company Strategy and Development Direction - The company is focusing on proactive inventory and cost management to navigate challenging market conditions [8] - Adjustments in production schedules are being made to align inventory levels with market demand [20] - The company aims to leverage precision solutions and technology to enhance customer value and operational efficiency [23] Management's Comments on Operating Environment and Future Outlook - Management noted that customers are facing headwinds from softer commodity prices and elevated interest rates, impacting equipment demand [20] - There is optimism regarding future opportunities, particularly in precision agriculture and sustainable operations [23] - The company is committed to maintaining competitiveness through disciplined cost control and strategic partnerships [20][21] Other Important Information - The Worldwide Financial Services net income was $153 million, impacted by higher provisions for credit losses [17] - The company announced a strategic investment in Banco Bradesco to become 50% owners of its Brazilian financing subsidiary [18] - The company expects net income for fiscal year 2024 to be approximately $7 billion [19] Q&A Session Summary Question: Pricing assumptions for 2024 in precision and production Ag - Management explained that the increase in price assumptions was due to stabilization in the market and reduced need for incentives [55][56] Question: Underproduction strategy in the Construction segment - Management confirmed a mid-single-digit underproduction strategy to align with demand and manage inventory levels [59][60] Question: Pricing dynamics in the construction segment - Management noted increased price competition and a reduction in the full-year pricing guide to 0.5 points for 2024 [63][65] Question: Fourth quarter earnings guidance and seasonality - Management clarified that the fourth quarter's performance would not be indicative of the following quarters due to significant underproduction [71][74] Question: Inventory to sales ratio and demand - Management provided insights on maintaining inventory levels and the strategy to achieve a target inventory to sales ratio [78]

Nicholas SmithSometimes, it is enough to release a "not too bad" report to have investors cheer. This is the case with Deere's Q3 earnings. Deere (NYSE:DE) was trading near its 52-week lows as the market was pricing in the bad news coming from its peers, mainly AGCO (AGCO) and CNH Industrial (CNH). After all, as I showed in detail in one of my past analyses on Deere, the business is cyclical, and it is strictly related to farmer net income and corn prices. Since corn is quickly going down, so is farmer ...

Deere & Company (DE) reported third-quarter fiscal 2024 (ended Jul 28) earnings of $6.29 per share, which beat the Zacks Consensus Estimate of $5.80. The bottom line, however, plunged 38% from the prior year quarter.This was mainly due to lower shipment volumes across all segments, reflecting weak demand. This was somewhat negated by the company’s pricing strategies and cost-saving measures.Net sales of equipment operations (comprising Agriculture, and Turf, Construction and Forestry) were $11.39 billion, d ...

For the quarter ended July 2024, Deere (DE) reported revenue of $11.39 billion, down 20.3% over the same period last year. EPS came in at $6.29, compared to $10.20 in the year-ago quarter.The reported revenue represents a surprise of +4.73% over the Zacks Consensus Estimate of $10.87 billion. With the consensus EPS estimate being $5.80, the EPS surprise was +8.45%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectati ...