Deere & Co.'s FQ2 earnings dropped a less-than-expected 16% to $2.72/share ($624 million) from $3.13 last year; last year's results included the now discontinued healthcare unit, net of which the company would have earned $2.17. Revenue rose 5% to $6.88 billion. Both numbers beat analyst estimates of $2.41 on $6.46 billion. The world's largest maker of farm equipment said it plans a 2% price hike this year, and has added new tractors to keep up with growing demand from the corn/ethanol industry: "Improving conditions in the global farm sector, coupled with a positive customer response to the company's innovative product lineup, are continuing to drive strong results," said Robert Lane, CEO. In February, the company raised its 2007 income guidance from $1.33 to $1.4 billion, and said sales would increase slightly. Deere shares are up 38% over the last year, 27% YTD, and are up 1.7% to $122.66 in pre-market trading.
Sources: Press release, MarketWatch, Bloomberg
Commentary: Agricultural Commodities: Profiting From Supply and Price Increases • Barron's: Corn Prices Will Fuel Deere & Co. Growth • Why Durable Competitive Advantage Matters
Stocks/ETFs to watch: Deere & Company (DE). Competitors: Caterpillar Inc. (CAT), CNH Global N.V. (CNH), Kubota Corp. (KUB), Terex Corp. (TEX), Joy Global Inc. (JOYG). ETFs: Vanguard Industrials ETF (VIS), PowerShares Industrial ETF (PRFN), PowerShares DB Agriculture Fund (DBA)
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