QUOTE AND NEWS
TheStreet.com  3 hrs ago  Comment 
NEW YORK (TheStreet) -- Last week, Deere & Co. , the world's largest maker of farm equipment, reported that its fiscal third-quarter profit fell by 15%, and it cut its profit forecast for the year. A day later, it announced that it's laying off...
SeekingAlpha  7 hrs ago  Comment 
By Josh Arnold: Shares in equipment manufacturer Deere & Co. (NYSE:DE) have languished for years now. Shareholders who have held the stock have underperformed the market due to questionable fundamentals at Deere and even recently, shares are well...
Forbes  Aug 18  Comment 
In this environment it is best to focus on brand name companies that decline on weakness and test a value level. Here are five stocks to consider.
Forbes  Aug 15  Comment 
Deere's results suffered due to weak conditions in the global farm equipment sector, which negatively impacted revenue of its Agriculture & Turf business. However, this was partially offset by gains at its Construction & Forestry and Financial...
Wall Street Journal  Aug 15  Comment 
Deere said it will lay off more than 600 factory employees indefinitely as part of its plan to scale back agricultural equipment production amid weaker demand.
Jutia Group  Aug 15  Comment 
[PR Newswire] - MOLINE, Ill., Aug. 15, 2014 /PRNewswire/ -- Deere & Company (DE) today announced it will reduce the size of its manufacturing workforce at some agricultural equipment factories in response to current market demand for its products....
SeekingAlpha  Aug 15  Comment 
By Investing Doc: Agricultural equipment manufacturer Deere & Co. (NYSE:DE), managed to beat revenue and earnings estimates Wednesday, but only after previously guiding lower last quarter. More concerning, at least in the short term, was the...
Motley Fool  Aug 14  Comment 
Reviewing the key takeaways from Deere's third-quarter conference call.
TheStreet.com  Aug 14  Comment 
Story updated at 9:55 a.m.to reflect market activity. NEW YORK (TheStreet) -- Credit Suisse cut its price target for Deere to $98 from $104 Thursday, reiterating its “outperform” rating for the stock. Shares of Deere fell -0.6% to $83.99...
SeekingAlpha  Aug 13  Comment 
By Jason Russ: Deere & Company (NYSE:DE) reported earnings today that beat analyst EPS and revenue estimates. EPS came in at $2.33, which was 13 cents above analyst estimates. Revenue came in at $9.5 billion, which was $750 million above...




RELATED WIKI ARTICLES
 

Deere & Company (NYSE: DE) is the world's leading manufacturer of agricultural and forestry equipment by revenue. [1][2] The company also produces equipment used for construction, residential lawn care, commercial landscaping, and other consumer and commercial heavy equipment products. Perhaps best known by consumers for their lawn tractors, Deere's products also include harvesters, excavators, loaders, industrial sprayers, and utility vehicles.

Approximately 50% of Deere's revenue comes from sales of agricultural equipment.[3] Consequently, much of Deere's success hinges upon the success of the agriculture industry and crop prices. Increased research in renewable energy sources that use ethanol, a chemical material typically derived from corn will benefit Deere. Ethanol-based energy research and development over the next several years could cause a large growth in corn prices, leading to higher agricultural activity which would increase Deere's sales of farm equipment.

Business Overview

Error creating thumbnail
Error creating thumbnail
Error creating thumbnail

Deere & Company is one of the world's largest manufacturer of heavy machinery and is the leading producer of agricultural and forestry equipment. In addition to designing and manufacturing equipment, the company has a network of dealers and distributors that sell its equipment and utilize Deere's parts network. Also, Deere has an in-house credit department that allows customers to finance their purchases directly through Deere. The company is divided into four business segments:

Agricultural Equipment: This segment develops and manufactures farming equipment such as tractors, harvesters, balers, sprayers, utility vehicles and other machines. Deere is the world's leading producer of agricultural equipment.

Construction & Forestry Equipment: This segment is responsible for construction equipment such as excavators, bulldozers, and dump trucks as well as forestry equipment that includes feller bunchers, skidders, and knuckleboom loaders. Deere is the world's largest producer of forestry equipment.

Commercial & Consumer Equipment: This segment produces commercial and consumer landscaping equipment such as mowers, tractors, trimmers and other lawn care machinery. Deere also makes landscaping equipment designed for use on golf courses.

Financial Services: Deere's financial services department provides clients with the opportunity to finance their purchases. Deere's financial services segment operates at a very high margin, contributing to only 8% of total revenue, but over 20% of total operating income.

Quarterly and Annual Earnings

Q1 FY 2011 Quarterly Earnings

Deere & Company doubled for the first quarter of 2011 when compared to fiscal earnings in the first quarter of 2010.[4] Driving this increase in income was a 27% increase in net sales and revenues globally.[4] These were similarly driven by an overall increase in the demand for farm machinery and a generally favorable climate for construction.[4] Net income totaled $513.7 million for the quarter as compared to $243.2 million in Q1FY2010.[4]

FY 2010 Annual Earnings

Deere & Company posted net income of $457.2 million for the fourth quarter of 2010, an increase from a loss of $322.8 million in the fourth quarter of 2009.[5] Fourth quarter net income translated to earnings of $99.0 million for the quarter.[5] Net sales and revenues increased by 35% and culminated at $7.202 billion and were a Deere & Company quarterly earnings record.[5] Driving this growth was a quarterly increase in the net sales of equipment operations, increasing from $4.726 in Q4 FY2009 to $6.564 in Q4 FY2010.[5] Deere saw increases for its yearly earnings as well, increasing from $873.5 million in FY2009 to $1.865 billion in FY2010.[5]

Trends and Forces

Biofuels Research Will Impact Sales Levels

Deere's agricultural equipment sector will prosper if the nation has to harvest massive amounts of corn or soybeans to fuel its vehicles. It takes about 21 pounds of corn to make 1 gallon of ethanol, which would mean much more demand for Deere's tractors if corn based ethanol took off.

People only consume biofuels, it seems, when gas prices are extremely high. Ethanol is about 15-20% less efficient than gasoline, and studies have shown it needs to be about 40 cents cheaper per gallon to compete. [6] This implies that gas prices need to be relatively high for Deere to benefit from the biofuel trend.

The Strength of the Housing Market Directly Impacts Deere's Sales and Operations

The US housing market is highly influential upon Deere's revenue, particularly in its Commercial & Consumer Equipment segment. Most sales from this segment come from sales of lawn tractors, mowers, and other landscaping and yardwork equipment. When the housing market thrives, consumers purchase and commission the construction of new homes, and many decide to purchase lawn mowers to care for their own yards or hire landscaping services.

When the housing market heats up, Deere sells more equipment and generates more revenue and profit. When the housing market falters, consumers cut back on unnecessary expenditures such as landscaping services and are less likely to make relatively large purchases such as mowers and other lawn care machinery, the prices for which can reach into the thousands of dollars.

Deere's Performance will be Reliant upon its Ability to Capitalize on Emerging Markets

Internationally, Deere has been attempting to gain a stronger presence in markets throughout Western Europe where it faces stiff competition from CNH Global N.V. (CNH) and AGCO (AG) . Deere is also working to establish itself more firmly in emerging markets such as Brazil, India, China, and Russia.

Last year, Deere took steps towards enhancing its presence in these nations through building factories in Brazil and China, a technical and engineering center in India, and by solidifying its distribution and support network throughout Russia.

Deere is very well poised to benefit from the increased demand for its products from these emerging economies. Everything from its construction equipment used to build roads and cities to lawn tractors used in the backyards of newly built homes, would likely see increased sales. Thus, if Deere can successfully insert itself into these markets and use its size and brand reputation to compete with other manufacturers, Deere will experience significantly increased revenues in years to come.

Competition

Deere operates in several industries, and competes with major players within those industries. It primarily competes in the Tractors and Agricultural Machinery market along with Caterpillar (CAT), AGCO (AG), FIAT S.p.A. (F-MI), and Kubota (KUB). Caterpillar and Deere are the major players in the US markets. [7] Deere has more definitive dominance in Wholesale Farm, Lawn and Garden equipment within the United States, though it is a very fragmented market. Its major publicly traded competitors include CNH Global N.V. (CNH), Kubota (KUB), AGCO (AG).[7]

Finally, Deere competes in the construction machinery area, where it loses quite definitively to Caterpillar. It also competes with CNH Global N.V. (CNH), Komatsu, Terex (TEX), and a large number of private companies.[7]

References

  1. stock:Deere_&_Company_(DE)/Filing/10-K/2008/F3465691 DE 10-K Report, 2008
  2. stock:Deere_&_Company_(DE)/Filing/10-K/2009/F47088201 Fourth Quarter 2009 Reports
  3. Deere & Co. 10-K Annual Report 2009
  4. 4.0 4.1 4.2 4.3 | Deere Reports First Quarter Annual Earnings
  5. 5.0 5.1 5.2 5.3 5.4 Deere Announces Fourth Quarter Earnings
  6. [http://news.yahoo.com/s/ap/20090714/ap_on_re_ca/us_farm_scene_e85_outlook | Yahoo News: Massive Ethanol Decrease in 2009]
  7. 7.0 7.1 7.2 [ http://www.reuters.com/finance/stocks/overview?symbol=DE.N |Reuters Research]
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki