This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Farm Slowdown Fears Weigh on Deere & Co. (DE)

Stocks in this article: DE

NEW YORK (TheStreet) -- Deere & Company's (DE) exposure to a slowdown in the farming industry clouded better-than-expected results on Tuesday.

By midmorning, shares had taken off 0.71% to $86.84.

The heavy machinery maker warned of a 3% decrease in equipment sales over fiscal 2014, and a 6% drop in the three months to April. Full-year net income is expected to be in the range of $3.3 billion, 6.7% lower than a year earlier.

Against "moderating demand for agricultural equipment," the company foresees worldwide sales of agriculture and turf equipment to decline 6% for the full year. The segment accounts for 89% of profits in its equipment sales business (excluding its financial services arm).

"Although farm incomes are expected to remain at healthy levels in 2014, they are forecast to be lower than in the previous year. In Deere's view, the decline will have a dampening effect on demand, especially for larger models of equipment," the company said in a statement.

The U.S. Department of Agriculture recently projected a steep decline in income over 2014, with net farm profits expected to drop 27% to $95.8 million, its lowest level since 2010. Over the past 12 months, decreasing prices and larger harvest for the nation's largest crops, corn and soybeans, ate into growers' profits.

UBS reiterated its "sell" rating on Deere due to its overexposure to agricultural weakness.

"We expect DE stock performance to revert to more historical norms relative to corn price performance, and we expect already lower corn prices to pressure demand for ag equipment in the year ahead. We expect DE's earnings will decline in 2014, driven by weakening ag sales, as farmers anticipate lower cash receipts," wrote analyst Steven Fisher in a note.

Deere & Co. reported a 5% increase in quarterly net income to $681.1 million. Per-share earnings were 10% higher year over year to $1.81, 29 cents more than analysts surveyed by Thomson Reuters anticipated. Including its financial services arm, revenue rose 3% to $7.65 billion.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs