Deere's Results Build on Construction
Posted at 3:09 p.m. EDT on Friday, May 22, 2015
Saved by construction!
That's how I feel about the quarter from John Deere (DE), which was definitely a disappointment when it comes to sales of ag equipment, but not from the heavy Deere machines used to build things.
The ag orders here fell more than 20%, which normally would have led to a dramatic shortfall. But instead, the company blew the estimates away, in part because of tremendous execution but also because of an improvement in housing starts.
We all know the farmer in this country's been victimized by lower crop prices, and a JPMorgan (JPM) piece warning you off Deere earlier this week cited the dire straits of the industry.
All I can say is, I think people took a look at the earnings and decided, "If this company can make that much money with these punk sales, who knows how much it can make if things get better."
That wasn't the only surprise today. I was flummoxed by the weak numbers in Hewlett-Packard (HPQ), but people looked right through them and lapped the company's stock up because of the coming de-merger and the opportunities that abound for the enterprise business. I am circumspect, but I know break-ups are a powerful positive.