Deere (DE) Stock Slumps on Lower Earnings Guidance

NEW YORK (TheStreet) -- Deere (DE) - Get Report stock is declining 4.67% to $78.41 on heavy trading volume on Friday afternoon after the company lowered its full year earnings guidance despite reporting better-than-expected results for the fiscal 2016 second quarter.

The Moline, IL-based agriculture and construction equipment manufacturer reduced its net income outlook to $1.2 billion from $1.3 billion for fiscal 2016.

The guidance implies earnings per share of $3.79, down from the prior earnings outlook of $4.11 per share, according to Credit Suisse analysts, Barron's reports. Wall Street was anticipating earnings of $4.08 per share for the full year.

"The lower 2016 EPS guide is mostly due to weakness in [construction and forestry] and lower net income in financial services (was lowered to $480M from $525M)," analysts explained.

Construction and forestry sales dropped 20% for the first half of the year because of "lower shipment volumes and higher sales-incentive costs," Deere said in a statement.

For the fiscal second quarter, Deere reported earnings of $1.56 per share on revenue of $7.88 billion, while Wall Street was anticipating earnings of $1.48 per share on revenue of $6.71 billion.

So far today, 8.08 million shares of Deere have exchanged hands, more than double its average daily volume of 3.06 million shares. 

Separately, Deere has a "buy" rating and a letter grade of B at TheStreet Ratings because of the company's respectable return on equity, which offsets somewhat weak growth in earnings per share.

You can view the full analysis from the report here: DE

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.