Zacks Industry Deere, Kubota, CNH Industrial and Lindsay

Industry Overview - The Zacks Manufacturing - Farm Equipment industry includes companies that manufacture agricultural equipment such as tractors, combines, and harvesting equipment [3][4] - The industry is currently facing challenges due to weak commodity prices and low farm income, which are impacting farmers' purchasing decisions [1][5] Current Trends - Low farm income is a significant concern, with a projected net farm income of $140 billion for 2024, a decline of 4.4% from 2023 [6][7] - Total crop receipts are expected to decline by 10% to $249 billion, primarily due to lower prices for corn and soybeans [8] - High costs and supply-chain issues are affecting the industry, leading to increased lead times for deliveries [9] Future Demand Drivers - Despite current challenges, demand for agricultural equipment is expected to rise due to the need for food driven by population growth [10] - The U.S. agricultural machinery market is forecast to reach $39.56 billion in 2024, with a projected growth to $53.7 billion by 2027, reflecting a CAGR of 6.3% [10][11] - Technological advancements in farming, such as precision agriculture, are anticipated to be key growth drivers [12] Company Insights Deere (DE) - Deere is experiencing solid growth in order levels, supported by replacement demand and a focus on advanced technology [19][20] - The company has a trailing four-quarter earnings surprise of 11.8% and an estimated long-term earnings growth rate of 12% [21] Kubota (KUBTY) - Kubota is advancing its long-term vision "GMB2030" aimed at smart agriculture and has made strategic investments in AgTech companies [22][23] - The company has seen a 15.7% increase in its fiscal 2024 earnings estimate over the past 60 days [25] CNH Industrial (CNH) - CNH Industrial is well-positioned for growth with a strong agricultural product portfolio and strategic acquisitions enhancing its precision agriculture technology [26][27] - The company has a trailing four-quarter earnings surprise of 7.3% [28] Lindsay (LNN) - Lindsay is benefiting from demand for its Road Zipper System and has secured a multi-year supply agreement valued at over $100 million [29][30] - The company has a trailing four-quarter earnings surprise of 20% [31] Industry Performance - The Zacks Manufacturing - Farm Equipment industry has underperformed compared to the broader market, with a decline of 0.1% over the past 12 months [17] - The industry's current valuation is at a forward 12-month EV/EBITDA ratio of 32.08X, significantly higher than the S&P 500's 14.28X [18]