Post Earnings Coverage as Deere Earnings and Sale Declined Y-o-Y but Surpassed Expectations
Upcoming AWS Coverage on Terex Post-Earnings Results
LONDON, UK / ACCESSWIRE / December 5, 2016 / Active Wall St. announces its post-earnings coverage on Deere & Co. (NYSE: DE). The Company reported its fourth quarter and fiscal 2016 financial numbers on November 23, 2016. The agricultural and construction equipment maker's sales declined on global farm recession and weak construction-equipment market. The Company expects the construction-equipment market's slump to continue in FY17. Register with us now for your free membership at: http://www.activewallst.com/register/.
One of Deere's competitors within the Farm & Construction Machinery space, Terex Corp. (NYSE: TEX), reported on October 31, 2016, its third quarter 2016 results. AWS will be initiating a research report on Terex in the coming days.
Today, AWS is promoting its earnings coverage on DE; touching on TEX. Get our free coverage by signing up to:
http://www.activewallst.com/registration-3/?symbol=DE
http://www.activewallst.com/registration-3/?symbol=TEX
Earnings Reviewed
For the three months ended on October 31st, 2016, net income attributed to Deere & Co. was $285.3 million, or $0.90 per share, compared to $351.2 million, or $1.08 per share, for the same period of 2015. The results handily beat analysts' expectations for earnings per share of $0. 40 per share. For FY16, net income attributed to Deere & Co. was $1.524 billion, or $4.81 per share, compared to $1.940 billion, or $5.77 per share, in 2015.
During Q4 FY16, the company's worldwide net sales and revenues decreased 3% to $6.52 billion from $6.72 billion from the year ago same period; however sales numbers were above Wall Street's expectations of $6.16 billion.
Segment Results
Net sales of Deere & Co.'s worldwide equipment operations (which comprise Agriculture and Turf, Construction and Forestry) declined 5% for Q4 FY16 and 9% for FY16 compared to the same periods in 2015. The company's equipment net sales in the United States and Canada decreased 14% for Q4 FY16 and 13% for the full year. The company's equipment operations reported operating profit of $354 million for the quarter and $1.880 billion for the full year compared to $335 million and $2.177 billion in 2015. The improvement for the quarter was primarily driven by price realization, partially offset by lower shipment volumes, an impairment charge for international construction and forestry operations, and higher production costs. Net income of the company's equipment operations was $185 million for Q4 FY16 and $1.06 billion for FY16 compared to $200 million and $1.308 billion for the corresponding periods in 2015.
The Company's Financial services reported net income attributed to Deere & Co. of $109.8 million for Q4 FY16 and $467.6 million for FY16 compared to $153.0 million and $632.9 million for the respective year ago periods. The decline for both periods was primarily due to less-favorable financing spreads, higher losses on lease residual values, and a higher provision for credit losses.
Deere & Co.'s Agriculture & Turf segment reported sales decline of 5% for the reported quarter and 7% for the year on lower shipment volumes; which were partially offset by the favorable effects of currency translation for the quarter and unfavorable currency effects for the year. The segment's operating profit for Q4 FY16 was $371 million and $1.70 billion for the year compared to $271 million and $1.649 billion, respectively, in 2015.
The company's Construction & Forestry division posted a 5% decline in sales for Q4 FY16 and 18% drop for FY16, largely due to lower shipment volumes and higher sales-incentive costs. The division had an operating loss of $17 million for the reported quarter and operating profit of $180 million for the year. This compared with operating profit of $64 million and $528 million for the same periods in 2015.
Balance Sheet
As of October 31st, 2016, Deere & Co. reported cash and cash equivalents worth $4.34 billion compared to $4.16 billion at the end of the prior fiscal year. For FY16, the company reported cash from operations of $3.76 billion compared to cash usage of $3.74 billion in FY15. As of fiscal 2016-end, long-term borrowing totaled $23.8 billion, flat compared with the prior year's fiscal end.
Outlook
Deere & Co. is estimating equipment sales to be down about 4% for Q1 FY17 and approximately 1% for FY17. Net sales and revenues are projected to decrease about 1% for FY17, while net income attributed to Deere & Co. is projected to be around $1.4 billion. Industry sales for agricultural equipment in the US and Canada are expected to decline 5% to 10% for FY17. For the upcoming fiscal year, Deere & Co.'s worldwide sales of construction and forestry equipment are forecasted to be up about 1%.
Stock Performance
Last Friday, the stock closed the trading session at $101.50, dropping 1.17% from its previous closing price of $102.70. A total volume of 3.28 million shares have exchanged hands, which was higher than the 3-month average volume of 3.12 million shares. Deere's stock price advanced 15.13% in the last month, 21.64% in the past three months, and 17.75% in the previous six months. Furthermore, since the start of the year, shares of the company have soared 36.07%. The stock is trading at a PE ratio of 21.10 and has a dividend yield of 2.36%.
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