Shares of agricultural equipment maker Deere & Company (NYSE:DE) are plunging today after the company’s lowered financial outlook overshadowed its better-than-anticipated second-quarter performance.
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Deere’s Q2 Performance
During the quarter, Deere’s top line declined by nearly 12.4% year-over-year to $15.24 billion. Still, the figure came in ahead of expectations by $1.95 billion. Similarly, its EPS of $8.53 topped estimates by $0.67. In the comparable year-ago period, Deere’s EPS stood at $9.65.
Deere’s Q2 performance points to continued pressure of tepid demand for farm machinery owing to lower crop prices. Net sales in Deere’s Production and Precision Agriculture segment declined by 16% to $6.58 billion owing to lower shipment volumes. Concurrently, its Small Agriculture and Turf net sales declined by 23% to $3.18 billion. The company’s Construction and Forestry segment, in comparison, fared better with a 7% decline in net sales.
Outlook Disappoints
Amid this challenging scenario, Deere is focusing on managing its production and inventory levels in line with demand patterns. For the full year, the company anticipates that there will be a 20%-25% decline in its Production and Precision Agriculture and Small Agriculture and Turf net sales. Net income is expected to reach $7 billion. The company previously estimated net income in the range of $7.5 billion to $7.75 billion for FY2024.
Is Deere Stock a Buy, Sell, or a Hold?
Today’s price decline comes after a nearly 10% rise in Deere’s share price over the past six months. Overall, the Street has a Moderate Buy consensus rating on the stock, alongside an average DE price target of $418.60. However, analysts’ views on Deere could see changes following today’s earnings report.
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