Deere Q4 Earnings: What To Expect?
Deere (NYSE: DE) is scheduled to report its fourth quarter fiscal 2017 earnings on November 22. We expect the company’s overall sales to increase in low double digits this quarter, primarily due to the strength in the construction industry in the last couple of quarters. Deere’s profits are also likely to increase in double digits this quarter due to the expected sales growth and Deere’s cost-cutting measures. The government support for infrastructure projects in China and India should continue to boost Deere’s construction sales. The rebound in the North American construction industry is also likely to play a vital role in Deere’s sales growth this quarter. Deere’s agriculture equipment sales grew strongly last quarter, but we expect moderate growth in the segment this quarter.
Deere’s Construction Equipment Sales May Gain Momentum
Deere’s construction and forestry division had a strong third fiscal quarter, as its sales increased by nearly 30% and operating income doubled. The solid growth of Deere’s construction equipment sales was driven by strength in the Asian construction industry, led by China. The government support for infrastructure projects continued in the third quarter of 2017 despite the slowing growth of the Chinese economy. Housing starts and government spending on infrastructure projects in the U.S. have also increased in the last couple of quarters. We expect the above factors to drive Deere’s construction sales this quarter.
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Agriculture Equipment Sales Growth Likely To Remain Sluggish This Quarter
Last quarter, Deere’s agriculture and turf revenues grew by nearly 13% with the sales growth coming across operating regions. The increase was largely the result of solid growth from the U.S. and Canada, where sales had declined earlier due to a supply-demand mismatch. However, we do not expect significant growth for Deere’s agriculture equipment this quarter. Farm incomes in North America have declined this year due to lower exports caused by high grain stocks and the record harvest in the United States. We expect Deere’s agriculture sales to continue to grow this quarter, albeit at a slower rate than last quarter.
For more information, please refer to our complete analysis for Deere
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