Deere & Co. Q2 Earnings Top Forecasts, But Shares Dip on Lowered Outlook
Deere & Co. beat earnings expectations in Q1, but shares plunge lower after outlook lowered for 2024.
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Deere & Co. (NYSE: DE), a leading agricultural equipment manufacturer, reported strong second-quarter earnings on Thursday, May 16, 2024.
The company’s earnings per share (EPS) and revenue surpassed analyst expectations. However, it lowered its full-year net income forecast due to declining crop prices and reduced demand for its products.
Deere & Co. Tops EPS and Revenue Forecasts in Q1, Lowers 2024 Outlook
Deere & Co. reported Q2 EPS of $8.53, beating the analyst estimate of $7.87 by $0.66. The company’s revenue for the quarter reached $15.24 billion, exceeding the consensus estimate of $13.3 billion.
Despite the strong quarterly performance, Deere revised its full-year net income forecast downward to approximately $7.0 billion, from the previous forecast of $7.5 to $7.75 billion.
The company attributed the revised outlook to declining crop prices and reduced demand for tractors and combine harvesters. The U.S. Department of Agriculture projected a 25.5% decline in net farm income to $116.1 billion for the year, driven by a drop in corn and soybean prices to over three-year lows.
Higher interest rates have also pressured farmers, leading to increased inventories of agricultural equipment and forcing Deere and other manufacturers to cut production. As a result, Deere expects sales of large agricultural equipment to decline between 20% and 25% this year, an adjustment from the earlier expectation of a roughly 20% fall.
Deere & Co. Shares Drop on Lowered 2024 Outlook
Deere & Co. closed at $414.02 on May 15, 2024, reflecting a slight increase of 0.30%. However, in pre-market trading today, the stock was down 6.50%, trading at $387.10 at the time of writing.
The 52-week range for Deere’s stock was $321.85 to $446.76, and the company’s market cap stood at $115.25 billion as of the latest close.
The company’s trailing P/E ratio is 12.07, with a forward P/E ratio of 15.53. Key profitability metrics include a profit margin of 16.39%, return on assets (ROA) of 9.90%, and return on equity (ROE) of 45.61%.
Deere’s total revenue (ttm) was $60.76 billion, with net income attributable to common shareholders at $9.96 billion, and diluted EPS (ttm) at $34.32.
Deere’s total cash (mrq) was $3.83 billion, and the company’s total debt/equity ratio was 289.24%. Analyst price targets for Deere’s stock range from a low of $365.00 to a high of $495.00.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
