Is now the time to buy Deere?

Posted Aug 13th 2008 5:25PM by Jonathan Berr
Filed under: International Markets, Earnings Reports, Deere and Co (DE), Commodities

Kudos to my colleague Elizabeth Harrow for pointing out that shares of Deere & Company (NYSE: DE) may be heading for a fall. As today's earnings report shows, her post was on the money.

Net income rose to $575.2 million, or $1.32 per share. Revenue soared 17% to $7.74 billion. Analysts had expected profit of $1.36 per share on revenue of $7.23 billion. Shares of the largest farm equipment maker had their biggest drop in two decades, according to Bloomberg.

What's killing Deere is rising raw material costs. The company's overall business is doing fine. Agricultural sales rose 35% in the quarter. Not surprisingly Commercial and Consumer revenue fell 1% and Construction and Forestry declined 7%.

The company expects equipment sales to rise about 29% in the fourth quarter and 21% for the full year, according to the earnings press release. Net income is seen at about $425 million. Of particular note was the 20 to 25% increase the company expects in farm machinery sales in the United States and Canada thanks to robust commodities prices.

These forecasts, though, were below inflated Wall Street expectations.

"Analysts expected Deere's high-horsepower equipment help the company post bigger gains like CNH Global NV and Agco Corp," according to Bloomberg.

Maybe now that the bar has been set low enough, Deere will have no trouble crossing it.

Tags: agriculture, agriculture services, agriculture stocks, AgricultureServices, AgricultureStocks, construction, constructionequipment, DE, farming

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Reader Comments (Page 1 of 1)

8-14-2008 @ 1:53AM

Ronald Sperling said...

I love John Deere. I own a 1957 420-C Crawler, and I love it, it is in great shape and runs great and I don't think I will ever sell it. I am 59 years and this is the only John Deere I have ever owned, except for my dad that owned an old John Deere tractor that I rode on when I was about 9 years old. That was back in Oklahoma. If you would like to see a picture of it, I will gladly send it to your e-mail just e-mail me at Ronald9@aol.com.