Agricultural equipment manufacturer Deere & Co (NYSE: DE) reported better-than-anticipated fiscal 2021 third-quarter revenues and earnings, aided by a double-digit topline growth in all the three major business divisions. The company also upwardly revised its FY 2021 earnings outlook. Despite the impressive results, the stock saw profit booking, which pushed the price downwards by 2.10% or $7.55 to $351.43.
The Illinois-based company reported third-quarter revenues of $11.527 billion, an increase of 29.1% from $8.925 billion in the similar period last year.
For the quarter ended August 1st, 2021, Deere posted earnings of $1.667 billion, or $5.32 per share, an increase of 106% from $811 million, or $2.57 a share in the quarter ended August 2nd, 2020.
Analysts surveyed by Refinitiv had anticipated the company to report earnings of $4.58 per share on revenues of $10.33 billion.
Segment-wise,
- Production and precision agriculture revenues increased 29% y-o-y to $4.250 billion. The increase was led by higher shipment volumes and price realization.
- Small agriculture and turf revenues were $3.147 billion, up 32% from last year. Again higher shipment volumes and price realization paved the way for the topline growth. An increase in production costs partly negated the operation profit.
- Construction and forestry revenues grew 38% y-o-y to $3.016 billion.
- Financial services revenues were $902 million, an increase of 1% on a y-o-y basis. The growth was led by an improvement in operating-lease residual values, income earned on a better portfolio, a decrease in provision for credit losses, and beneficial financing spreads.
Provision for income taxes increased slightly to $491 million in 3Q 2021, from $457 million in 3Q 2020.
Looking ahead, Deere currently expects FY 2021 net income to be in the range of between $5.70 billion and $5.90 billion, an increase from the previous guidance range of $5.30 billion to $5.70 billion issued in May.
Furthermore, the company also expects FY 2021 production and precision agriculture segment revenues to increase between 25% and 30%, compared with last year. Small agriculture and turf revenues are anticipated to post a growth of approximately 25%. Construction and forestry revenues are projected to rise roughly 30% on a y-o-y basis.
The quarterly earnings beat and upward revision of FY 2021 earnings per share are expected to turn the stock bullish in the short term.
The historical price chart indicates that the stock is consolidating near 350 levels. The stock is also trading above its 50-day moving average, while the Chaikin money flow indicator has a positive reading. Therefore, we are anticipating the stock to resume its uptrend in the days ahead.
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