Update Deere (DE)
Deere (DE) is both a stock and one of the most reliable indicators of the fortunes of the agricultural sector.
No matter whether you own Deere (the shares are a member of the Jubak Picks 50 long-term portfolio) or are waiting for a turn in the sector as a whole, you should be very happy with the earnings, revenue, and guidance that Deere reported this morning, February 17.
For the fiscal first quarter, Deere reported earnings of 57 cents a share, a mere 38 cents a share better than Wall Street projected. Revenue fell by 7.1% from the year-earlier quarter but at $4.24 billion still came in above projections of $4.19 billion.
And then Deere topped that good news with even better guidance.
CEO Samuel Allen said the company expects sales to grow by 4% to 6% in the second quarter. That would produce revenue of $6.43 billion to $6.56 billion. Wall Street had been projecting second quarter revenue of $6.14 billion.
For the entire fiscal 2010 year, Deere expects sales by grow by 6% to 8% yielding revenue of $22 billion to $22.4 billion. Wall Street had been looking for $21.2 billion.
There’s really good news for other global agriculture stocks, say fertilizer stocks, for example, in these numbers since Deere’s sales historically closely track farm incomes.
The company’s best growth prospects are in the North American and Brazilian markets. The company is projecting growth in sales volume in both markets and a pickup in market share in Brazil. The weak market, as you might expect given recent anemic economic growth, remains Western Europe.
I don’t want to make too much of Deere as an indicator but there is good news in these numbers for the economy in general. One question about the current economic recovery has been When will companies increase production? For Deere the answer is Now.
Inventories have fallen to extraordinarily low levels—combine inventories, for example, were just 6% of sales in the fiscal first quarter. Looking at projected demand and inventories Deere says that it has significantly increased projected production for both combines and large tractors.
As I said, lots of good news no matter your investment exposure to the stock, sector or general economy.
Jim,
I was actually going to ask you about the earnings release this morning but you beat me to it. The upward revision of guidance is clearly favorable. On your previous sell you had a target of $56 by Jun `10 I think. Would you care to offer some input on where you think its headed now?
Potash inventories sag as dealers start restocking
North America potash inventories down sharply in Jan
http://www.reuters.com/article/idUSN1624961220100217
I don’t know about Deere, by in the Northwest the CAT dealer lots are so packed with inventory that they are parking inventory on additional lots. I have never seen so much machinery parked in one place.
well my friend in Calif. told me that the recycling
center in jackson Ca. may have to close do to
China not buying the recycled aluminum.
The hospitals in Vallejo Ca. are not paying there workers (out of monies?)
People are being hired for construction, then after two weeks The Companies go broke (NO PAY CHECK) the store have no gun ammo always (sold out.) I know people that have NOT payed there mortgage for over TWO years and they are still in there home?(default limbo).
Government fake numbers
(www.shadowstats.com)
I don’t know what to think Im scared to invest or hold us dollars.
Glad I kept my DE…I only kept it as I have seen more DE product going by on semi’s then usual, and I know farmers by me had a great year!
Do you recommend buying back DE?
Right now I am content with Yara and Pot
bitpoop,
California is becoming the American version of Greece. Bailout pending…
Ed,
In USA History not one State bailout have ever occurred, it would be the first time.
mopama,
I hope history is enough to keep it from happening.
Absolutely no bail out of CA!
I think Caterpillar (CAT) is a much better company and a much better stock. And as far as Brazil, CAT was recently named as on of Brazil’s most admired companies…DE didn’t make that list. An even stronger case can be made for CAT because of the diversity of their products (ag, construction, mining, engines, generators, military equip, the list goes on…)
Ed,
Why are you so afraid? If CA sinks, then it’s bad for the whole country. Why wouldn’t you want to help the state provided they changes their ways going forward? I really don’t get the Republican way of thinking. You all are so self centered and selfish. And all your comments reflect that mentality.
freddywalky,
I love it when liberals accuse me of being selfish, as they demand more money from others (via government) for THEIR entitlement programs.
Last time I checked, I have never received ANY benefit from the state of California. Yet I am supposed to pay for their misguided notions of how to run a state? Forgive me while I laugh…
Well I’m certainly no Liberal (or Republican for that matter), but actually yes….you are expected to help your fellow citizens wherever they live (not to say that there should’t be any penalties involved). This is America…”WE THE PEOPLE”…not “We The People, unless you screw up then you’re on your own.”
Sorry catengineer, but yes, when you screw up, you ARE on your own!
If I run up huge amounts of debt by myself, is the government going to step in and subsidize me while I run up some more? No, but that’s what you suggest for California.
Let them cut their extravagant spending first. Then we’ll talk…
This is my first posting of a comment but I could not resist backing up EdMc’s comment; California’s problems are of their own making and self-inflicted. I am more than wiling to help my neighbor but not when that ‘neighbor’ has constantly dug their own debt hole deeper and deeper and refuse to acknowledge they are doing so. It is like an alchoholic; can’t be helped until they realize they are such and seek help on their own.
So is our military wrong for telling soldiers to never leave a wounded comrad down? Sounds like that’s what you’re suggesting for Cali. I’m by no means a supporter of rewarding bad behavior, and rewards shouldn’t come without stipulations, but these are American citizens we’re talking about.
catengineer,
The problem with using the military analogy in the California case is it would involve the “wounded comrade” would have had to have shot himself, and was trying to shoot himself again.
Well I certainly respect any and everyone’s opinions, and I’m not accusing anyone of anything, but if I saw a comrad shoot him or her self, and tried to do it again, I’d want to make an attempt to stop them. I couldn’t sleep at night if I didn’t.
catengineer,
So we should let the federal government assume control of California’s budget?
Absolutely not! But if they need help righting their ship, I think we should do so in the most fiscally responsible way we can, and punish those responsible for getting them in this mess. We’re all we got, if we don’t take care of our own no one else will.
catengineer,
Here’s the problem: California’s politicians are beholden to the government unions there. The unions won’t accept paycuts or job cuts, ergo the politicians won’t accept cutting government employee’s pay or jobs. If you can’t cut pay or jobs in a bloated government, and raising the already high taxes there is almost out of the question (California has already suffered the mass exodus of many businesses and individuals), how do you balance the state budget?
LT’s comment earlier was right on the money: It is very much like an alcoholic. Like many alcoholics, they have to hit rock-bottom before they realize they have a problem. In the case of California, until they completely run out of money and access to the sovereign debt markets is too expensive for them to use, they won’t change. Until they HAVE to cut government services and benefits to the bare bones, they won’t stop spending.
Either the federal government has to step in, or hard reality will. Like you, I don’t think it is the federal government’s role to do it. But that only leaves hard reality as an option.
catengineer,
You’re precisely right when you say we need to take care of our own. Since Californian’s got themselves in this situation in the first place, they need to be the one’s getting themselves out. Otherwise what incentive do the other states have for maintaining any semblance of fiscal responsibility? California is perfectly capable of balancing their budget by either raising taxes or cutting spending. Just because those options are not politicaly popluar doesn’t justify the need to go digging in my pockets for money.
Well said ruters!
Ruters,
Sounds like the difference between you and I is that I don’t see Californian’s as them…I see them as us. If the bell tolls for California, it tolls for us all. If they are indeed capable of righting their own ship, then they certainly should, but if they can’t at this point, then we should help. And Ed, maybe you’re right that the politicians and unions are at the root of their problems. If that’s the case I say deal with the politicians and unions, not the hard working men, women and children of California. Standing pat and watching one of (if not the) most populus states in our country go bankrupt won’t be good for any of us.
catengineer,
How do I deal with another state’s politicians? Frankly, the “hard working men and women” of California need to recognize their own problem and deal with it. As long as they keep electing self-centered fools who are incapable of making the hard choices needed, they will keep spiraling down the financial drain.
There’s an old saying about people deserving the politicians they elect. This applies quite well to California.
I live in Georgia. We don’t have anywhere near the benefits they have in California. We also are facing the same economic hard times here. Why would I want money going out of Georgia to pay for the pampered people of California?
catengineer,
Let me give you an analogy: You drive a Honda Civic. Your neighbor drives a Porsche. You both make about the same amount of money. Your neighbor is facing bankruptcy. Do you agree to help him pay for his Porsche so he doesn’t have to file bankruptcy?
Ed,
As far as your first comment…I live in Mississippi so greetings fellow Southerner. I was raised, taught and learned that when you help others you help yourself. Now don’t get it twisted, I by no means have a bleeding heart. And if it’s wrong for your Gerogia money to be helping California people (which I assume you know that it already is), then why is it right for a family who lives in Thomasville, GA (or any other small town) to have their money spent in the city of Atlanta (which a great deal of GA’s $ does), or go towards the world’s busiest airport that they have never used? The reason it’s right is because it’s not just about that family, it’s about us as a whole, that’s why.
As far as your second comment…..if you re-read my comment above, I said that if California can right their own ship they certainly should. In the case of my Porsche driving neighbor….he/she is fully capable of helping themselves. But either way, if that neighbor had children who depended on them, I couldn’t stand there and watch them go hungry…I’d be glad to give them a bite to eat.
And as far as Californian’s deserving the politicians they elect, I highly doubt they got elected by promising to mismanage the states finances, pay state employees IOU’s and steer them to financial ruin. The politicians there got elected by promising to do things that they didn’t do (just like the rest of them).
catengineer,
I live in Savannah, so I know how Georgia’s public money flows: It all starts in Atlanta and spreads out from there. By the time you reach Savannah, there ain’t much left!
I appreciate your altruism more than you know. However (you knew this was coming, right?), altruism on a personal level is far different than altruism on a government level.
Remember, government is paid for by EVERYONE. Even the poorest among us pay for it, either thru taxes (i.e. even the poor pay consumption-based taxes) or through lost opportunities (i.e. when we tax corporations, that takes money away which could be used to hire people).
When we take care of the poor or less fortunate, we need to do it directly (or through charitable organizations, although I personally believe direct altruism is the most effective method), and not through government.
catengineer,
We all know about politicians who promise one thing and deliver something else! This is why voters need to hold politicians accountable for what they say.
catengineer,
I don’t want to belabor this point to much longer, it’s clearly a matter of personal opinion.
That being said, if my neighbor “chooses” to drive a Porsche but couldn’t afford to feed his children, he damn well better be trading down to a Taurus before he comes over to my house asking for money.
Take it outside, gentlemen. Take it outside!
gnomony,
We’re having a civil discussion. It’s certainly much better than our last global warming discussion!
catengineer
I just wanted to thank you for your voice of reason. I wholeheartedly agree with the views you’ve expressed. Bravo!
Yes, this has been a civil and insightful conversation. Ed I agree with you about personal vs. governmental altruism…I was just playing off your Porsche driving neighbor analogy. And for the record I believe in responsibility just as much as I believe in charity.
Ruters you’re right, this topic is getting overdone, so I’ll make my closing comment this:
America is the best place on God’s green Earth to be, and to live. We are indeed the leaders of the Free World and have a special place here (American Exceptionalism). It is my belief that we did NOT get here by NOT helping each other out and being there for each other. Community and brotherhood are key threads in the fabric of American spirit. Let’s not kick our fellow citizens while they’re down but instead help them up and do our best to keep them from falling again. God Bless you all.
Human beings are like electriciaty – always choosing the path of least resistance. If you believe that you can buy a porsche and have your neighbor pay for it – most people will by the porsche. If you believe you will have to pay for it all by yourself, you will decide if the joys of the porsche outweight the pain of the high car payments.
Sometimes the way you help your neighbor is by letting them pay for the consequences of their actions. The problem becomes one of when their actions have caused the consequences to become extremely painful.
It is like kids – when you kids doesn’t study in school and is danger of failing – if you blame the teachers and threathen the school district with a law suit so they let your kids graduate – does that help your kid? What lesson do your kids learn – that they do not have to be responsible for themselves? This is a lesson almost all of us seem to need to relearn every so often.
What lesson will the politicans of California learn if we bail them out without serious pain to them?
Ed, et al. – WOW – you’ve never gotten anything from California? Really – is that how southerners think? Do you eat vegetables (#1 farming economy), do you own a PC (#1 tech state), do you believe in exports (#1 global commerce state)?? Never gotten anything from Cali? WOW!