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Deere & Company (NYSE:DE) is scheduled to release its 2nd quarter 2013 earnings on Wednesday, May 15th. Below I have provided an update of the quarter as well as an overview of earnings expectations.

Profile and Estimates

Deere & Company has a market cap of $35.91 billion and currently trades for $92.19 per share. Shares are up 7.31% YTD and trade 35.70% above their 52-week low of $67.93. Analysts have a mean target price of $99.06 and a median price target of $98.00 on the shares. Sixteen analysts have an average first quarter earnings per share estimate of $2.72 on estimated revenues of $9.81 billion. Deere & Company has only beat earnings expectations in two of the previous four quarters.

(click to enlarge)

Prior Quarter Results

  • Net sales grew 11% year over year to $6.793 billion.
  • Diluted EPS of $1.65, 27% above 1Q2012 results.

Fundamentals and Highlights (Sources cited below article)

Positives

  • P/E of 11.5 is lower than the industry averages 27.6.
  • In the past three years revenue has averaged 16.1% growth and net income 52%, both higher than the industry averages 0.9% and 8.4% respectively.
  • ROE of 44.7 compared to the industry averages 24.9.
  • Growth potential from developing markets in Brazil, China, Russia and India.
  • Loyal customers.
  • 2.05% dividend.

Negatives/Challenges

  • P/B of 4.8 and P/S of 1.0 are both above the industry averages 2.7 and 0.9 respectively.
  • D/E of 3.0 is above the industry averages 1.4.
  • Highly cyclical industry.
  • EV/EBITDA of 10.68 is above that of both Caterpillar (NYSE:CAT) and CHN Global (NYSE:CNH), 8.97 and 8.16 respectively.

Take Away

I like Deere & Company and have owned them in the past but the shares appear to be fairly valued and because of this I would wait for a pullback before making a purchase. Watch for earnings on Wednesday and keep an eye out for this company - an overall market decline could put shares into the buy zone.

Sources

In addition to the links above, ratios and financial data was sourced from Morningstar.com, which you can find here.

Other company data was sourced from the annual report that can be accessed here.

Source: Deere's Second Quarter Earnings Preview