Factors Setting The Tone For Deere (DE) In Q3 Earnings
Zacks Investment Research | Aug 11, 2019 09:19PM ET
Deere & Company (NYSE:DE) is scheduled to report third-quarter fiscal 2019 results on Aug 16, before the opening bell.
The Zacks Consensus Estimate for earnings per share is pegged at $2.81 for the fiscal third quarter, indicating an improvement of 8.5% from the year-ago quarter. The Zacks Consensus Estimate for total revenues for the quarter is pegged at $9.30 billion, up from $9.28 billion reported in the year-ago quarter.
Let’s see how things are shaping up prior to this announcement.
Key Factors to Consider
Concerns over tariffs and trade policies and lower commodity prices led to farmers getting cautious about their equipment purchases. This will keep depressing Deere’s top line. However, industrial sales and replacement demand for agricultural equipment will likely boost order activity for the Agriculture and Turf segment, aiding the upcoming quarterly results, in turn.
The Zacks Consensus Estimate for net sales of Deere’s Agriculture and Turf equipment segment is currently pegged at $6.2 billion for the quarter to be reported, an expected drop from the year-ago quarter’s $6.3 billion. The Agriculture and Turf equipment segment’s operating income is projected at $718 million, down from the $806 million reported in the prior-year quarter.
The Construction & Forestry segment will benefit from continued robust demand for equipment, as well as the Wirtgen acquisition. The economic environment for the construction, forestry and road building industries looks solid, and continues to spur demand for both new and used equipment, which will likely be conducive to the to-be-reported quarter’s results.
The Zacks Consensus Estimate for the Construction & Forestry segment’s sales is pegged at $3.18 billion for the May-July quarter, suggesting an improvement of 6.5% from the year-ago reported figure. The Construction & Forestry segment is estimated to report an operating profit of $382 million, indicating a rise of 36% from the year-earlier quarter’s $281 million.
Net sales of equipment operations (which comprise Agriculture and Turf, Construction and Forestry) are projected at $9.44 billion, calling for an improvement of 1.65% from the year-ago quarter’s reported figure.
The Zacks Consensus Estimate for the Financial Services segment’s sales is pinned at $902 million, suggesting growth of 8.6% from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for the segment’s operating profit is currently pegged at $213 million, indicating an improvement of 8.6% from prior-year quarter.
Inflated raw-material costs resulting from the implementation of tariffs and logistics will continue dampening Deere’s performance. Further, improved operational performance, cost management, and continued investment in innovative technology and solutions will drive the company’s performance. Nevertheless, unfavorable foreign currency-translation impact will dent margin performance.
Deere & Company Price and EPS Surprise
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