Tractor and farm equipment manufacturer Deere & Co (NYSE: DE) reported better-than-anticipated fiscal 2021 second-quarter revenue and earnings.
Furthermore, the company also upwardly revised its FY 2021 outlook. Following the upbeat results, the stock closed at $359.75, up to $4.53 or 1.28% from the previous close.
Moline, an Illinois-based company, reported second-quarter revenues of $12.058 billion, increasing 30% from $9.253 billion in a similar period last year.
Net sales for 2Q 2021 were $10.998 billion, compared with $8.224 billion in 2Q 2020. The increase in revenue mirrors a robust market environment and overall improvement across various units and geographic divisions.
For the quarter ended May 2, 2021, the company posted net income of $1.790 billion, or $5.68 per share, up 169% from $666 million, or $2.11 a share, in the quarter ended May 3, 2020.
Analysts surveyed by Zacks had anticipated the company to report earnings of $4.44 per share on net sales of $10.38 billion.
John May, chairman, and CEO said, “With another quarter of solid performance, John Deere closed out the first half of the year on a highly encouraging note. [….] Deere is expected to see increased supply-chain pressure through the balance of the year… Despite these challenges, Deere is on the path for a sturdy year.”
Segment-wise,
- Production & Precision Agriculture revenues rose by 35% y-o-y to $4.529 billion. More enormous shipment capacities and price understanding led to the growth.
- Small Agriculture & Turf revenues were $3.390 billion, an increase of 30% from last year. The increase was led by higher shipment volumes, price realization, and favorable effects of foreign currency translation
- Construction & Forestry revenues increased 36% y-o-y to $3.079 billion.
- Financial Services revenues were $222 million in Q2 2021, compared with $60 million in Q2
In the future, the company now expects FY 2021 net income to be between $5.30 billion and $5.70 billion. Earlier, Deere had issued net income guidance in the range of $4.60 billion to $5 billion.
Furthermore, the company also anticipates Production & Precision Agriculture segment to report a growth of 25% to 30% in FY 2021.
The small Agriculture & Turf segment is forecast to post revenue growth of between 20% and 25%. Likewise, Construction & Forestry revenues are expected to increase between 25% and 30% on a y-o-y basis.
The quarterly earnings beat and upward revision of FY 2021 net income are expected to keep the stock range-bound with a slight bullish bias in the short term.
The historical price chart indicates that the stock of Deere continues to have firm support from the 50-day moving average. The stochastics oscillator is also in the bullish zone. Therefore, we are anticipating the stock to remain in an uptrend in the short term.
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