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Deere (DE) Earnings Surpass Estimates in Q4, Improve Y/Y

Deere & Company DE reported fourth-quarter fiscal 2021 (ended Oct 31, 2021) earnings of $4.12 per share, which beat the Zacks Consensus Estimate of $3.82. The bottom line surged 72% from the prior-year quarter, reflecting strong demand. Its shares gained 3.4% in pre-market trading on the upbeat results despite the ongoing inflationary pressures and supply chain disruptions.

Net sales of equipment operations (which comprise Agriculture and Turf, Construction and Forestry) were $10.276 billion, reflecting an increase of 19% year over year. Revenues fell short of the Zacks Consensus Estimate of $10.344 billion. Total net sales (including financial services and others) were $11.327 billion, up 16% year over year.

Operational Update

Cost of sales in the reported quarter was up 21% year over year to $7.8 billion. Total gross profit for the reported quarter climbed 13% year over year to $2.5 billion. Selling, administrative and general expenses declined 7% to $936 million from the prior-year period. Equipment operations reported an operating profit of $1,313 million in the quarter compared with $867 million in the year-earlier quarter. Total operating profit (including financial services) surged 45% year over year to $1,613 million in the fiscal fourth quarter.

Deere & Company Price, Consensus and EPS Surprise

Deere & Company price-consensus-eps-surprise-chart | Deere & Company Quote

Segment Performance

The Production & Precision Agriculture segment’s sales were up 23% year over year to $4.7 billion, primarily driven by higher shipment volumes and price realization. Operating profit in the segment increased 34% year over year to $777 million.

Small Agriculture & Turf sales rose 17% to $2.8 billion from the year-earlier quarter on higher shipment volumes and price realization. This segment’s operating profit improved 23% year over year to $346 million.

Construction & forestry segment sales were $2.8 billion, reflecting year-over-year growth of 14%, backed by higher shipment volumes and price realization. The segment’s operating profit went up 38% year over year to $270 million.

Net revenues in Deere’s Financial Services division were $869 million for the reported quarter, down 2% year on year. The segment’s operating profit amounted to $299 million, up 20% year over year.

Financial Update

Deere reported cash and cash equivalents of $8 billion at the end of fiscal 2021 compared with the $7.1 billion recorded at the end of the prior fiscal. Cash generated from operating activities was $7.7 billion in the fiscal 2021 compared with $7.5 billion in the prior fiscal. At the end of the fiscal 2021, long-term borrowing was roughly $33 billion compared with the $33 billion at the end of fiscal 2020.

Fiscal 2021 Performance

Deere’s earnings per share soared 119% year over year to $18.99 in fiscal 2021. The bottom line surpassed the Zacks Consensus Estimate of $18.73. Net sales of equipment operations were up 27% year over year to $39.7 billion but missed the Zacks Consensus Estimate of $39.8 billion. Total net sales came in at $44 billion, up 24% year over year.

Outlook

Deere expects net income for fiscal 2022 between $6.5 billion and $7 billion, compared with $5.963 billion in fiscal 2021. Demand for farm and construction equipment will continue to be supported by positive fundamentals, including favorable crop prices, economic growth and increased infrastructure spending. However, supply-chain pressures will persist.

Price Performance

Image Source: Zacks Investment Research

Deere’s shares have gained 33.6% so far this year, outperforming the industry’s growth of 28.9%.

Zacks Rank

Deere currently carries a Zacks Rank #3 (Hold).

A Look at How Other Stocks Fared

AGCO Corporation AGCO reported adjusted earnings per share of $2.41 in third-quarter 2021 (ended Sep 30, 2021), which improved 15% from the last year. This was aided by strong operational execution and robust end-market demand.

AGCO expects earnings per share in 2021 in a range from $8.75 to $9.00 compared to $5.61 in 2020. Higher sales and production volumes, and pricing benefits are expected to offset material cost inflation.

The Zacks Consensus Estimate for the company’s 2021 earnings per share is pegged at $9.03, indicating year-over-year growth of 61%.  The Zacks Ranked #3 stock has gained 26% in a year.

Titan Machinery Inc. TITN reported third-quarter fiscal 2022 (ended as of Oct 31, 2021) adjusted earnings per share of 96 cents, up 81% year over year. The upside can be attributed to solid performance across all three segments — Agricultural, Construction and International.

Titan Machinery, backed by the ongoing momentum in its markets, increased its guidance for earnings per share for fiscal 2022 to a range of $2.40 to $2.60. In the past year, shares of Titan Machinery have gained 106.6%. The Zacks Consensus Estimate for the company’s fiscal 2022 earnings per share stands at $2.13, suggesting year-over-year improvement of 69%. TITN currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Caterpillar Inc. CAT reported third-quarter 2021 adjusted earnings per share of $2.66, which improved 75% from the prior-year quarter as all of its segments reported improved performances. The upside was driven by higher demand in end markets and across all geographies, which helped counter inflated input costs.

The Zacks Consensus Estimate for the Caterpillar’s 2021 earnings per share is pegged at $10.35, indicating year-over-year growth of 58%.  Its shares have gained 16% in a year. It currently carries a Zacks Rank #3.


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Deere & Company (DE): Free Stock Analysis Report
 
Caterpillar Inc. (CAT): Free Stock Analysis Report
 
AGCO Corporation (AGCO): Free Stock Analysis Report
 
Titan Machinery Inc. (TITN): Free Stock Analysis Report
 
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