Wednesday, November 23, 2011

Meanwhile, Deere (DE) Posts Another Fine Report, but Technicals Remain Weak

In this era of immense correlation and headline driven action, it sometimes is difficult to remember there are actual companies that underlie these stock symbols.  Looking across the ugly landscape today, a few strands of green sit out like a sore thumb.  One of them is Deere (DE) which continues to benefit from the mega trend that is the agricultural boom.  Another fine quarter by the dominant franchise in farming equipment.

That said, technically the stock has been weak the past half year - unable to get over the 200 day moving average and stay there as institutional money has rotated away from cyclicals by and large.

Via Bloomberg:

  • Deere & Co. (DE), the world’s largest farm-equipment maker, reported fiscal fourth-quarter profit and forecast 2012 earnings that topped analysts’ estimates as U.S. farmers flush with cash buy more tractors and combines.
  • Net income rose 46 percent to $669.6 million, or $1.62 a share, in the quarter ended Oct. 31, from $457.2 million, or $1.07, a year earlier. Analysts projected per-share profit of $1.44, the average of 15 estimates compiled by Bloomberg. Sales climbed 20 percent to $8.61 billion from $7.2 billion.
  • Fiscal 2012 profit will be $3.2 billion, the company said in its initial forecast for the period. That’s more than the $2.95 billion average estimate of 15 analysts
  • “It’s a big quarter,” Eli Lustgarten, an Independence, Ohio-based analyst for Longbow Research who has a “buy” rating on Deere, said in an interview. “Big guidance in sales and profitability. Better than expected.”
  • U.S. farm income will jump 31 percent this year to a record $103.6 billion, the U.S. Department of Agriculture said in August. In fiscal 2010, 65 percent of Deere’s sales came from the U.S. and Canada.
  • Equipment sales are projected to increase about 15 percent for fiscal 2012 and rise 16 to 18 percent in the first quarter from a year earlier, Deere said today. Currency exchange will benefit sales by about 3 percent for the quarter and about 1 percent for the year, it said.
  • Sales across the farm-machinery industry in the U.S. and Canada will rise 5 to 10 percent in 2012 as demand remains strong for high-horsepower equipment, Deere said. Industry sales will be little changed in Western and Central Europe and South America, the company said.  Sales in Asia for the industry will be up “strongly” and will rise “moderately” in the former Soviet Union next year, Deere said.
  • Agricultural equipment made up 78 percent of Deere’s fiscal 2010 sales. Construction and forestry accounted for 15 percent.
  • Deere introduced a record number of products during fiscal 2011 and announced plans for six new factories in China, Brazil and India, the company said. Net sales of equipment in the U.S. and Canada rose 14 percent in the fiscal fourth quarter and 31 percent in the rest of the world.

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