Deere Or A Gazelle?

Deere & Company trounced street expectations and signaled continuing global economic recovery in its latest earnings report

Hey Global Investor, here’s what you need to know before the US markets open.

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Deere Or A Gazelle?

Deere & Company trounced street expectations and signaled continuing global economic recovery in its latest earnings report.

Background: Better known by its brand name John Deere, the Moline, IL-based company manufactures agricultural machinery and heavy equipment, and also offers financial services.

In August, Deere had announced it would lay off an unspecified number of employees owing to Covid-related slowdown. In FY20, the company took on impairment charges and employee-separation costs of $458M.

In its FY21 forecast, the company included no such one-time charges, while emphasizing the company will continue to assess its operations and global footprint.

What Happened? Deere ended its fiscal year in style with Q4 numbers and an FY21 outlook that surpassed analyst expectations.

Key Numbers:

  • EPS for Q4: $2.39 vs. 1.49 expected
  • Revenue for Q4: $8.7B vs. $7.7B expected

For FY20 overall: Net income of $2.79B with EPS of $8.69 (compared to analyst estimates of $2.25B and $7.74)

As for FY21 forecast, the company expects agricultural-equipment demand to grow in every region except Asia. Construction equipment sales are expected to grow between 5% to 10%. Given the improved US farmer sentiment and better commodity prices, the company expects to earn ~$3.8B next year.

The company is also gearing up to negotiate a new six-year contract in 2021 with the UAW, the powerful worker union. The current contract is set to expire on October 1st, 2021.

Market Reaction: Deere’s stock has risen 47.6% YTD and closed at $256.43 on Wednesday, down 1.94%.

Company Snapshot 📈

DE $256.43 -5.08 (-1.94%)

Analyst Rating (22 Analysts) BUY 64%, HOLD 27%, SELL 9%

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Later Today 🕒

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Fun Fact of The Day 🌞

The days from Thanksgiving through Cyber Monday capture 20% of all holiday online shopping.

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