Deere Q2 Earnings Decline 41% YoY, Issues Weak FY 2020 View

Deere Q2 Earnings Decline 41% YoY, Issues Weak FY 2020 View
May 25, 2020

 

Agriculture and construction machinery manufacturer Deere & Co (NYSE: DE) reported a 41% decline in the fiscal 2020 second-quarter net income – compared with last year. However, the company’s earnings and revenue surpassed Wall Street expectations. Deere also issued a fiscal 2020 outlook below the Street’s forecasts. Following the announcement of results, the stock lost 1.47% or 2.10 to close at $140.71.

The Moline, Illinois-based company posted second-quarter revenues of $9.253 billion, down 18% from $11.342 billion in the similar period last year. For the quarter ended May 3rd, 2020, Deere recorded Q2 earnings of $665.80 million, or $2.11 per share, compared with $1.135 billion, or $3.52 billion, in the year-ago period.

Analysts polled by FactSet had anticipated the farm equipment manufacturer to post earnings of $1.69 a share on revenues of $9 billion.

John May, chairman and CEO, expressed his happiness over the results: “Deere is well-known for developing strong relationships with a range of stakeholders, which prove extremely valuable in difficult times. We remain committed to offering a full suite of advanced digital tools that give our customers unique capabilities and help them do their work more efficiently and profitably. As a result, we’re confident the company will successfully manage the pandemic’s effects and strengthen its position serving customers in the future.”

Segment-wise,

  • Agriculture & Turf revenues fell 18% y-o-y to $5.968 billion
  • Construction & Forestry revenues were $2.256 billion, down 25% from $2.991 billion last year.

Sales in both segments fell primarily due to a drop in shipment volumes and the negative impact of currency exchange, partially negated by better price realization.

Deere’s financial services subsidiary, John Deere Capital Corporation (JDCC), posted revenues of $875 million, down 1% on a y-o-y basis.

Going forward, the company anticipates FY 2020 net income in the range of $1.6 billion to $2.0 billion, below the FactSet Consensus estimate of $2.04 billion.

For fiscal 2020, Deere’s worldwide sales of agriculture and turf equipment are anticipated to decrease between 10% and 15%, including a 2% negative impact of currency exchange rates. Similarly, the company’s worldwide sales of construction and forestry equipment are projected to decline between 30% and 40% in FY 2020, including a 2% negative impact of currency exchange rates.

Technically, the stock is trading below its 50-day moving average. Major resistance exists at 160 levels. The next support is anticipated only near 125 levels. Furthermore, the Chaikin money flow indicator has a negative reading. Therefore, we can anticipate the stock to move down in the short-term.

de - technical analysis - 25th May 2020

Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.

Janine

Janine

Janine is our editor for related stock market news. Andrew and Janine will be focusing on providing the latest trends and where the next hit could be


Related Articles

GoPro Turns Bullish as Camera Unit Sales Climb 35%

  Poor fiscal 2016 third-quarter results pushed the stock of action camera manufacturer Gopro Inc (NASDAQ: GPRO) below $10 in

Elliott Management Acquires $3.20bln Stake In AT&T

  The shares of AT&T Inc. (NYSE: T) soared $0.79 or 2.15% to close at $37.58 yesterday after activist investor

Dell’s 1Q18 Operating Loss Widens 979%

  Last Thursday, computer manufacturer Dell Technologies Inc. (NYSE: DVMT) reported a fiscal 2018 first-quarter net loss that widened from