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Deere & Company DE reported fourth-quarter fiscal 2024 (ended Oct. 27) earnings of $4.55 per share, beating the Zacks Consensus Estimate of earnings of $3.90. The bottom line decreased 45% from the prior-year quarter.

The downside was mainly led by lower shipment volumes across all segments, reflecting weak demand. It was somewhat negated by the company’s pricing strategies and lower production expenses.

Deere & Company Price, Consensus and EPS Surprise

Deere & Company price-consensus-eps-surprise-chart | Deere & Company Quote

Net sales of equipment operations (comprising Agriculture & Turf, Construction & Forestry) were $9.28 billion, down 32.8% year over year. Sales topped the Zacks Consensus Estimate of $9.15 billion. Total net sales (including financial services and others) were $11.14 billion, down 27.7% year over year.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Deere’s Q4 Operational Update

The cost of sales in the reported quarter moved down 30.3% year over year to $6.57 billion. Total gross profit decreased 38.2% year over year to $2.70 billion. Selling, administrative and general expenses rose 2.4% to $1.23 billion from the year-ago quarter.

Total operating profit (including financial services) declined 52.1% year over year to $1.45 billion in the fiscal fourth quarter.

DE’s Q4 Segment Performance

The Production & Precision Agriculture segment’s sales declined 38% year over year to $4.31 billion. The figure beat our model’s estimated revenues of $4.03 billion for the quarter. The downside was led by lower shipment volumes.

Operating profit decreased 64% year over year to $657 million due to lower shipment volumes/sales mix, partially negated by reduced production expenses. Our estimate for the segment’s operating profit was $543 million.

Small Agriculture & Turf sales were down 25% year over year at $2.31 billion on low shipment volumes, somewhat offset by price realization. Our projection for the segment’s sales was $2.11 billion. Operating profit declined 47% year over year to $234 million. The figure was higher than our estimate for an operating profit of $147 million for the segment.

Construction & Forestry sales were $2.66 billion, down 29% year over year on lower shipment volumes. The figure lagged our projection of $2.92 billion. Operating profit decreased 36% year over year to $328 million due to lower shipment volumes/sales mix, partially negated by lower production expenses. Our estimate for the segment’s operating profit was $301 million.

Revenues in Deere’s Financial Services division were $1.52 billion in the reported quarter, up 13% year over year. The figure was higher than our estimate of $1.42 billion. The segment’s operating income was $231 million in the quarter under review, up from $229 million in the prior-year quarter. Our projection was $250 million for the quarter.

Net income for Financial services declined 9% year over year to $173 million in the fourth quarter of fiscal 2024.

Deere’s Q4 Cash & Debt Position

Deere reported cash and cash equivalents of $7.32 billion at the end of fiscal 2024 compared with $7.46 billion at fiscal 2023 end. Cash flow from operating activities was $9.23 billion in fiscal 2024 compared with $8.59 billion in the prior fiscal year.

At the end of fiscal 2024, DE’s long-term borrowing was $43.23 billion compared with $38.48 billion at fiscal 2023 end.

DE’s FY24 Performance

The company reported earnings per share of $25.62 in fiscal 2024, 26% lower than earnings of $34.63 in fiscal 2023. It beat the Zacks Consensus Estimate of earnings of $25.00.

Net sales of equipment operations (comprising Agriculture and Turf, Construction, and Forestry) decreased 19.4% year over year to $44.76 billion, which beat the consensus estimate of $44.63 billion. Total net sales (including financial services and others) were $51.72 billion, down 16% year over year.

Deere’s FY25 Guidance

Deere expects net income for fiscal 2025 between $5 billion and $5.5 billion.

Net sales for Production & Precision Agriculture are expected to decline 15% year over year in fiscal 2025. Sales of Small Agriculture & Turf are expected to drop 10%. Sales of Construction & Forestry are projected to move down 10-15%. The Financial Services segment’s net income is expected to be $750 million.

DE’s Share Price Performance

Deere’s shares have gained 10.8% in the past year compared with the industry’s 8.3% growth.

Zacks Rank

Deere currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performances of Other Farm Equipment Stocks

Let us take a look at how other farm equipment stocks fared in their earnings releases.

Lindsay Corporation LNN delivered adjusted earnings per share of $1.17 in fourth-quarter fiscal 2024 (ended Aug. 31. 2024), beating the Zacks Consensus Estimate of $1.04. However, the bottom line fell 33% year over year.

The company generated sales of $155 million, down 7% from $167 million in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $154 million.

CNH Industrial N.V. CNH came out with third-quarter 2024 earnings of 24 cents per share, missing the Zacks Consensus Estimate of 28 cents. This compares with earnings of 42 cents a year ago.

CNH posted sales of $5.65 billion for the quarter ended September 2024, missing the Zacks Consensus Estimate of $4.78 billion. The top line decreased 22.3% year over year.

AGCO Corporation AGCO delivered adjusted earnings per share of 68 cents in third-quarter 2024, missing the Zacks Consensus Estimate of $1.07. The bottom line fell 83% year over year. Low commodity prices and elevated input expenses impacted equipment demand in the quarter.

AGCO’s sales decreased 24.8% year over year to $2.6 billion in the September-end quarter. The top line missed the Zacks Consensus Estimate of $2.9 billion. Excluding the unfavorable currency-translation impacts of 0.6%, net sales fell 24.2% year over year.

Zacks Investment Research

Deere & Company DE is scheduled to report fourth-quarter fiscal 2024 results on Nov. 21 before the opening bell.

The Zacks Consensus Estimate for earnings has moved down 2% over the past 60 days to $3.90 per share. The consensus mark implies a 52.8% plunge from the year-ago actual. The consensus estimate for revenues is pegged at $9.3 billion, indicating a 32.3% year-over-year decline.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

DE’s Earnings Surprise History

Deere’s earnings beat the Zacks Consensus Estimates in the trailing four quarters, the average surprise being 11.8%.

What the Zacks Model Predicts for Deere

Our model does not conclusively predict an earnings beat for Deere this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here.

Earnings ESP: The Earnings ESP for Deere is +0.98%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: Deere currently carries a Zacks Rank #4 (Sell).

Factors Likely to Have Shaped DE’s Q4 Performance

Deere has been facing challenges due to weak farmer spending amid low commodity prices. The company stated that in the wake of challenging conditions in the global agricultural and construction sectors, it would align its production with demand levels. This is likely to have weighed on the company’s fiscal fourth-quarter performance.

High production expenses selling, administrative and general expenses; and research and development expenses are likely to have impacted the company’s margin in the quarter.

Nevertheless, favorable price realization is expected to have negated some of these headwinds, as seen in the fiscal third quarter.

Deere’s Q4 Segmental Projections

Our model predicts the Production & Precision Agriculture segment’s revenues to be $4.03 billion for the fiscal fourth quarter , suggesting a year-over-year decrease of 42.1%. We expect the segment’s operating profit to be $543 million, indicating a 70.4% fall from the prior-year quarter’s reported figure. Gains from price realization are likely to have been somewhat offset by escalated production costs and lower shipment volumes.

Our estimate for the Small Agriculture & Turf segment’s revenues is pegged at $2.11 billion for the fiscal fourth quarter, indicating a 31.7% decline from the prior-year quarter’s actual. The segment’s operating profit is estimated at $147 million, suggesting a 66.9% year-over-year fall. The Small Agriculture & Turf segment’s performance is expected to have been affected by elevated production costs; higher research and development, and selling, general and administrative expenses; and lower shipment volumes, partially offset by price realization.

The Construction & Forestry segment’s sales are estimated to be $6.14 billion for the fiscal fourth quarter, suggesting a 38.9% dip from the prior-year quarter’s reported number on lower volume. We predict the segment’s operating profit to plunge 41.7% year over year to $301 million.

Our estimate for the Financial Services segment’s revenues is pegged at $1.42 billion for the fiscal fourth quarter, indicating a 5.4% rise from the year-ago quarter’s actual. Our projection for the segment’s operating profit is $251 million. The segment reported operating profit of $229 million in the prior-year quarter.

DE’s Price Performance

Shares of Deere have gained 6.5% in the past year compared with the industry’s 5.5% growth.

Deere’s Peer Performance

AGCO Corporation AGCO delivered adjusted earnings per share of 68 cents in third-quarter 2024, missing the Zacks Consensus Estimate of $1.07. The bottom line fell 83% year over year. Low commodity prices and elevated input costs impacted equipment demand in the quarter.

AGCO’s revenues decreased 24.8% year over year to $2.6 billion in the September-end quarter. The top line missed the Zacks Consensus Estimate of $2.9 billion. Excluding the unfavorable currency-translation impacts of 0.6%, net sales fell 24.2% year over year.

Stocks to Consider

The Gap Inc. GAP, expected to release the third-quarter 2024 results on Nov. 21, currently has an Earnings ESP of +3.05 and a Zacks Rank #2. The company has a trailing four-quarter surprise of 142.8%, on average.

The Zacks Consensus Estimate for GAP’s third-quarter earnings is pegged at 56 cents. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Eagle Outfitters, Inc. AEO, expected to report the third-quarter 2024 results on Dec. 4, currently has an Earnings ESP of +0.15 and a Zacks Rank #3. The company has a trailing four-quarter surprise of 12%, on average.

The Zacks Consensus Estimate for AEO’s earnings for the third quarter is pegged at 46 cents.

Zacks Investment Research