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Deere (DE) to Report Q4 Earnings: What's in the Offing?

Zacks Equity Research

Deere & Company DE is scheduled to report fourth-quarter fiscal 2019 results on Nov 27, before the opening bell.

Which Way are the Estimates Headed?

The Zacks Consensus Estimate for Deere’s earnings per share is pegged at $2.13 for the fiscal fourth quarter, indicating a decline of 7.4% from the year-ago quarter. The Zacks Consensus Estimate for total revenues in the quarter is pegged at $8.46 billion, up from $8.34 billion reported in the year-ago quarter.

Let’s see how things are shaping up for this announcement.

Key Factors to Consider

Lower commodity prices, as well as tariffs and trade-related concerns, have made farmers cautious about spending on farm equipment. Also, inflated raw-material costs resulting from the implementation of tariffs are likely to have impacted Deere’s margins in the fiscal fourth quarter. In addition, unfavorable foreign currency translation is likely to have thwarted margin in the quarter. Nevertheless, cost management, footprint assessment and continued investment in innovative technology and solutions are likely to have driven the company’s performance.

The Zacks Consensus Estimate for net sales of Deere’s Agriculture and Turf equipment segment is currently pegged at $5.68 billion for the quarter to be reported, implying an improvement from the year-ago quarter’s $5.61 billion. The Agriculture and Turf equipment segment’s operating income is projected at $511 million, down from the $567 million in the prior-year quarter.

The Construction & Forestry segment is anticipated to have benefited from continued robust demand for equipment and the Wirtgen acquisition. The economic environment for the construction, forestry and road building industries looks solid and continues to spur equipment demand. This is likely to reflect on the results for the period under consideration.

The Zacks Consensus Estimate for the Construction & Forestry segment’s sales is pegged at $2.85 billion for the August-October quarter, suggesting an improvement of 4% from the year-ago quarter’s reported figure. The Construction & Forestry segment is estimated to report an operating profit of $283 million, indicating a fall of 4% from the year-earlier quarter’s $295 million.

The Zacks Consensus Estimate for net sales of equipment operations (which comprise Agriculture and Turf, Construction and Forestry) is $8.53 billion, calling for an improvement of 2.27% from the year-ago quarter’s reported figure.

The Zacks Consensus Estimate for the Financial Services segment’s sales is pinned at $948 million, suggesting growth of 11.4% from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for the segment’s operating profit is currently pegged at $224 million, indicating an improvement of 11.4% from the prior-year quarter.

Deere & Company Price and EPS Surprise

Deere & Company Price and EPS Surprise

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

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for Deere this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Deere is -1.76%. This is because currently the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $2.10 and $2.13, respectively.
 
Zacks Rank: Deere currently carries a Zacks Rank of 3.

Stocks Worth a Look

Here are some stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

Campbell Soup Company CPB has an Earnings ESP of +3.14% and a Zacks Rank #3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco Wholesale Corporation COST has an Earnings ESP of +10.01% and a Zacks Rank of 2, at present.

Canadian Imperial Bank of Commerce CM has an Earnings ESP of +0.61% and is currently a Zacks Rank #3 stock.

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