Why Is Deere (DE) Down 0.5% Since Last Earnings Report?

Core Viewpoint - Deere's recent earnings report showed a mixed performance, with earnings per share missing estimates and a decline in net income, while net sales increased year over year, indicating potential challenges ahead for the company [2][11]. Financial Performance - Fourth-quarter fiscal 2025 earnings were $3.93 per share, missing the Zacks Consensus Estimate of $3.96, and decreased 14% from the prior year [2]. - Net sales of equipment operations reached $10.6 billion, up 14% year over year, surpassing the Zacks Consensus Estimate of $9.99 billion [3]. - Total net sales, including financial services, were $12.4 billion, an 11% increase year over year [3]. - The cost of sales rose 21% year over year to $7.94 billion, leading to a total gross profit decrease of 2.7% to $4.45 billion [4]. Segment Performance - Production & Precision Agriculture segment sales increased 10% year over year to $4.74 billion, but operating profit decreased 8% to $604 million due to higher production costs [5]. - Small Agriculture & Turf sales rose 7% to $2.46 billion, but operating profit plummeted 89% to $25 million, impacted by higher warranty expenses and tariffs [6]. - Construction & Forestry sales were $3.38 billion, up 27% year over year, with operating profit increasing 6% to $237 million [7]. - Financial Services division revenues were $1.55 billion, up 2% year over year, with net income rising to $293 million from $173 million in the prior year [8]. Cash and Debt Position - Cash and cash equivalents at the end of fiscal 2025 were $8.28 billion, up from $7.32 billion at the end of fiscal 2024 [9]. - Cash flow from operating activities was $7.5 billion in fiscal 2025, down from $9.23 billion in the prior fiscal year [9]. - Long-term borrowing increased to $43.5 billion from $43.23 billion at the end of fiscal 2024 [9]. Fiscal Guidance - For fiscal 2026, Deere expects net income between $4.00 billion and $4.75 billion, with varying projections for different segments [12]. - Production & Precision Agriculture sales are expected to decrease by 5-10%, while Small Agriculture & Turf sales are projected to rise by 10% [12]. Estimate Trends - Since the earnings release, there has been a downward trend in estimates, with the consensus estimate shifting down by 27.39% [13]. VGM Scores - Deere has a Growth Score of B but lags in Momentum with an F, resulting in an aggregate VGM Score of C [14]. Outlook - The overall trend in estimates has been downward, leading to a Zacks Rank of 4 (Sell), indicating expectations of below-average returns in the coming months [15].