Can Agriculture & Turf Drive Growth For Deere In Q3?

by Trefis Team
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Deere (NYSE: DE) is expected to publish its Q3 2018 results on August 17, reporting on what is likely to be another strong quarter. Consensus market estimates call for the company to report revenue of $9.2 billion and adjusted EPS of $2.74. Strong performance in the Agriculture and Turf segment – as a result of a recovery in commodity prices, improved demand for its agricultural equipment – and a favorable sales mix should drive Q3 earnings. We expect continued global tailwinds – increased global food consumption and higher population density that will drive a greater need for infrastructure development – to drive these results. Below, we take a look at what to expect when the company reports earnings.

We have a $178 price estimate for Deere, which is ahead of the current market price. Our interactive dashboard analysis on whether the Agriculture & Turf division can drive growth for Deere in Q3 details our expectations for the quarter. You can modify the different driver assumptions, and gauge their impact on the company’s earnings and valuation.

Agriculture & Turf To Drive Growth

The Agriculture and Turf segment enjoyed a strong first half of 2018, as margins improved as a result of a recovery in commodity prices and a favorable sales mix. Deere expects further improvement in the Agriculture segment, as a result of agricultural mechanization in developing countries and increased demand for food due to a rising population. This should result in strong order activity – increased replacement demand and demand for new equipment. Further, its most recent acquisition of Blue River Technology should help farmers reduce costs by decreasing the use of herbicides, which could lead to increased demand for its crop spraying equipment and provide decent long-term benefits. In addition, the acquisition of King Agro should help farmers improve productivity, which should further increase the demand for its spraying equipment. We expect a positive outlook for Deere in the near term, driven by improving conditions of the agriculture market, and increased global food consumption, which will likely spur demand for its agriculture products.

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