ETFs in Focus as Deere Beats on Q1 Earnings, Cuts View
Deere & Co DE, the world’s largest agricultural equipment maker under the iconic John Deere brand, reported robust first-quarter fiscal 2024 results, beating earnings and revenue estimates. However, Deere slashed its annual profit outlook, sending its shares down 5.2% on Feb 15. Notably, the stock fell the most in nearly three months.
This has put ETFs with the largest allocation to this farm equipment giant in focus. These funds include iShares MSCI Agriculture Producers ETF VEGI, Global X AgTech & Food Innovation ETF KROP, First Trust Indxx Global Agriculture ETF FTAG, Strive FAANG 2.0 ETF FTWO and VanEck Agribusiness ETF MOO.
Deere’s earnings per share were $6.23 in first-quarter fiscal 2024, beating the Zacks Consensus Estimate of $5.19. However, the metric fell 5% from the year-ago earnings. Total net revenues decreased 7% year over year to $10.5 billion but marginally beat the Zacks Consensus Estimate of $10.4 billion.
For fiscal 2024, the farm equipment giant cut the net income guidance to $7.50-7.75 billion from $7.75-$8.25 billion as tumbling crop prices give farmers less money for equipment purchases.
The company expects Production & Precision Agriculture revenues to fall 20%, with declines of 10-15% in Small Agriculture & Turf and 5-10% in Construction & Forestry.
iShares MSCI Global Agriculture Producers ETF (VEGI)
iShares MSCI Agriculture Producers ETF provides global exposure to the companies that produce fertilizers and agricultural chemicals, farm machinery, packaged foods and meats by tracking the MSCI ACWI Select Agriculture Producers Investable Market Index. Holding 149 stocks in its basket, Deere takes the top spot at a 21.6% share. American firms account for 62% of the assets, whereas Canada, Norway and India round off the next three spots.
iShares MSCI Agriculture Producers ETF is less popular and illiquid, with $132.7 million in AUM and around 4,000 shares in an average daily volume. It charges 39 bps in fees per year from investors (see: all Materials ETFs here).
Global X AgTech & Food Innovation ETF (KROP)
Global X AgTech & Food Innovation ETF seeks to invest in companies advancing innovation, and the use of technology in the agriculture and food industries. It tracks the Solactive AgTech & Food Innovation Index and holds 30 stocks in its basket. Deere occupies the third position with an 11.2% share. American firms account for 49% of the assets, whereas Japan, China and Canada round off the next three spots.
Global X AgTech & Food Innovation ETF has amassed $4.4 million in its asset base and charges 50 bps in fees per year from investors. It trades in an average daily volume of 4,000 shares.
First Trust Indxx Global Agriculture ETF (FTAG)
First Trust Indxx Global Agriculture ETF follows the Indxx Global Agriculture Index, which is a market-capitalization weighted index designed to measure the performance of companies directly or indirectly engaged in improving agricultural yields. It holds 50 stocks in its basket, with Deere occupying the top position at 9.9%. Here again, the United States is the top country with a 32.9% share, whereas Germany takes an 18.4% share.
First Trust Indxx Global Agriculture ETF has accumulated $9.2 million in its asset base and is trading in an average daily volume of 3,000 shares. It charges 70 bps in annual fees.
Strive FAANG 2.0 ETF (FTWO)
Strive FAANG 2.0 ETF follows the Bloomberg FAANG 2.0 Select Index and offers exposure to companies that are engaged in national security and natural resource security. It holds 50 stocks in its basket, with Deere occupying the second position at 8.6%.
Strive FAANG 2.0 ETF has accumulated $4.1 million in its asset base and trades in an average daily volume of 3,000 shares. It charges 49 bps in fees per year from investors.
VanEck Vectors Agribusiness ETF (MOO)
VanEck Agribusiness ETF is by far the most popular choice in the space, with an AUM of $802.9 million and an average daily volume of 79,000 shares. It tracks the MVIS Global Agribusiness Index, which offers exposure to companies involved in agri-chemicals, animal health and fertilizers, seeds and traits, farm/irrigation equipment and farm machinery, aquaculture and fishing, livestock, cultivation and plantations, and trading of agricultural products.
VanEck Agribusiness ETF holds 59 securities in its basket, with Deere capturing the third position with an 8% share. It charges 53 bps in annual fees.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Deere & Company (DE) : Free Stock Analysis Report
VanEck Agribusiness ETF (MOO): ETF Research Reports
iShares MSCI Agriculture Producers ETF (VEGI): ETF Research Reports
First Trust Indxx Global Agriculture ETF (FTAG): ETF Research Reports
Global X AgTech & Food Innovation ETF (KROP): ETF Research Reports
Strive FAANG 2.0 ETF (FTWO): ETF Research Reports
