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.
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!
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?
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.
catengineer
I just wanted to thank you for your voice of reason. I wholeheartedly agree with the views you’ve expressed. Bravo!
gnomony,
We’re having a civil discussion. It’s certainly much better than our last global warming discussion!
Take it outside, gentlemen. Take it outside!
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.
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.