Deere’s quarterly report
Deere released its third quarter results boasting of an 11-percent increase in earnings on higher sales, a 15-percent jump in worldwide sales (to $9.59 billion), and a whopping 23-percent jump in its construction and forestry businesses.
Part of the pessimism stems from gross margin, which fell about 70 basis points, and a general economic slowdown is causing the company to pull some punches. Deere cut its agriculture and turf sales forecast to 13 percent (from 15 percent) and construction and forestry down to 17 percent (from 20 percent) for the fiscal year. It also pulled back from earnings guidance of $3.35 billion, saying now it is more likely to come in at $3.1 billion.
Stephen Simpson, writing for the investment website Seeking Alpha, notes an important find in the report: the fact that Deere has been spending heavily on capex (capital expenditures). In the short term, this is going to depress cash flow, but over the long term, today’s investments may reap significant returns down the road. If it does, says Simpson, the company may be as much as 30 percent undervalued at present.
From our partners
The new Sandvik Ranger surface drill rig offers renowned drilling efficiency with up to 20% lower fuel consumption
Known to many by their former name, Ranger, Sandvik’s DX series surface…
MORE FROM Aggbeat Online
SUBSCRIBE & FOLLOW
- Sales manager killed at sand and gravel plant1082 Views
- Two teens dead after falling through ice at quarry683 Views
- CRH emerges as frontrunner for Holcim and Lafarge assets402 Views
- Obama wants 'bipartisan infrastructure plan,' no mention of gas tax hike228 Views
- Responses to Obama's State of the Union address227 Views