Stock of the Day
|
Deere & Co. (DE)
Deere & Co. Chugs Along on Booming Farm Sales
In a refreshing change to the business and economic news making headlines lately, Deere & Co. has just announced earnings for a particularly strong quarter. The agricultural and construction equipment maker has been on the rise, posting record results over the past four years amid the weakened housing market and economic downturns. They continue to streamline operations to capitalize on their successful divisions, but the sectors driving sales one quarter have been different from those that are the money-makers the next. Will strategy keep them profitable or should Deere take things one quarter at a time?
|
| Daily Chart |
If you are not able to see the chart, your email client probably does not support javascript. To view it, please click here
|
| Stock Analysis |
Deere & Co., the world's largest producer of agricultural machinery, reported a 52 percent increase in quarterly profit today, prompting a healthy boost in early trading. The company declared earnings of $422.1 million, or $1.88 per share, for the recently completed fiscal fourth quarter. During the same period last year, earnings were reported at $277.3 million, or $1.20 per share. Net revenue also climbed, rising 20 percent to $6.14 billion. The results far surpassed analyst expectations, which had called for net income of $1.55 per share on sales of $5.8 billion. The company's recently approved 2-for-1 stock split was not reflected in these results.
|
Buy Deere & Co. for just $4
|
So what has Deere's engines running on full steam? Although most of the country has been grappling with the weakened economy and housing troubles, which has taken a particular toll on equipment providers, Deere has been able to offset these losses with significant sales increases internationally. Sales in the construction, forestry, commercial, and consumer divisions may have weakened, but net sales of global equipment operations rose 21 percent for the quarter. While sales in the U.S. and Canada were up 15 percent, net sales outside of these two countries increased by an impressive 32 percent. The effect of currency translation alone accounted for a 9 percent addition to these international sales.
|
Behind the heightened spending by the global farming community is the increase in ethanol and biofuel production. The rise in production has driven demand for farm equipment and resulted in a 20 percent increase in sales for Deere. The gains in agricultural equipment counteracted the weakened construction and forestry divisions, but it may be the rising international demand that is keeping the company going. Deere expects the sales surge to continue and says the company is expecting 2008 earnings of around $2.1 billion and first-quarter profit of about $325 million. Chairman and chief executive Robert *** said, "Deere's continuing strong performance reflects improving execution of our plans to create a fundamentally more profitable, resilient business. As a result, the company has delivered four successive years of record results, and done so in the face of mixed market conditions." Resilient may be the key word here as economic changes make it difficult to forecast just what division will be the one driving profits.
|
Special Offer
|
| Buy DE for just $4
|
Profile |
Click here to view a detailed profile of Deere & Co..
|
|
|
|
|
Back to newsletter list
