Deere Smashes Estimates on Strong Overseas Demand

Strength in overseas markets helped offset weaker domestic sales as Deere & Co. reported a better-than-expected 52% increase in fiscal Q4 net income to $422.1 million, or $1.88/share, compared to estimates of $1.55/share. Sales climbed 20% to $6.14B, easily beating expectations of $5.80B. Overseas sales grew 32% Y/Y, boosted by a 9% positive forex impact, while sales in the U.S. and Canada rose 15%. CEO Robert W. Lane said Deere benefitted from an "improving global farm economy," but saw "weakening in the construction, forestry, commercial and consumer sectors, chiefly as a result of the U.S. housing downturn." (Earnings call transcript later today). He also commented that "Deere is well-positioned to continue benefiting from powerful global economic trends such as growing affluence and increasing demand for food, feed and biofuels." Deere expects sales to increase 25% in fiscal Q1-2008 and to grow 12% for the full year. Net income is seen at $325M and $2.1B, respectively. Deere shareholders recently approved a 2:1 stock split effective Dec. 3, for shareholders of record on Nov. 26. Shares of Deere rose 2.5% to $145 on Tuesday and were last up 1% to $146.52 in thin pre-market trading.

Sources: Press release, Bloomberg, MarketWatch
Commentary: Agriculture Stocks Are Smoking - But For How Much Longer? • Agribusiness Outshines Gold • Move Over Deere as CNH Global Plows Ahead
Stocks to watch: DE. Competitors: CAT, CNH, KUB, TEX, JOYG. ETFs: MOO, VIS, PRFN, DBA

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