Deere Stock Slides After an Earnings Beat—Here's Why (2024)
Key Takeaways
Agricultural and construction equipment maker Deere exceeded profit and sales forecasts for its first quarter of fiscal 2024, though its revenue fell 8% from a year earlier.
The company lowered its full-year guidance in anticipation of customers holding off on replenishing their fleets.
Shares dropped over 5% in intraday trading Thursday following the release.
Deere & Co. (DE) shares fell over 5% in intraday trading Thursday after the agricultural and construction equipment manufacturer lowered its full-year guidance as farmers pull back on purchases.
The maker of tractors and excavators now anticipates fiscal 2024 net income of $7.50 billion to $7.75 billion. That forecast was down from its previous estimate of $7.75 billion to $8.25 billion. Chief Executive Officer (CEO) John May said that the company expects “fleet replenishment to moderate as agricultural fundamentals normalize from record levels in 2022 and 2023.”
In the fiscal first quarter of 2024 ended Jan. 28, the company posted a profit of $6.23 per share, with revenue down 8% from a year earlier to $10.49 billion. Both exceeded forecasts.
Sales at its biggest unit, Production & Precision Agriculture, declined 7% to $4.85 billion on lower shipment volumes. Small Agriculture & Turf division sales tumbled 19% to $2.43 billion, as it also faced a drop in volumes. Sales of $3.21 billion at its Construction & Forestry division were roughly flat from the year before.
Deere shares were down 5.5% at $363.64 per share as of about 3:45 p.m. ET Thursday. They've lost more than 11% of their value over the past year.
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Deere stock fell in early trading Thursday after the company reported better-than-expected fiscal second-quarter earnings. Earnings looked fine. It's the farm outlook that's the problem.
Net income attributable to Deere & Company for fiscal 2024 is forecasted to be approximately $7.0 billion. “We are proactively managing our production and inventory levels to adapt to demand changes and position the business for the future,” May explained.
Shares of Deere retreated after the company cut its full-year outlook for the second quarter in a row, citing shaky demand for agricultural and turf products. The stock was recently down 3.5% at right around $400 apiece.
The average price target for Deere is $424.07. This is based on 16 Wall Streets Analysts 12-month price targets, issued in the past 3 months. The highest analyst price target is $495.00 ,the lowest forecast is $365.00.
As of today (2024-06-10), Deere's share price is $368.58. Deere's Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Apr. 2024 was $33.22. Therefore, Deere's PE Ratio (TTM) for today is 11.10.
Based on short-term price targets offered by 22 analysts, the average price target for Deere comes to $429.09. The forecasts range from a low of $363.00 to a high of $495.00. The average price target represents an increase of 13.15% from the last closing price of $379.22.
According to the latest long-term forecast, Deere price will hit $400 by the end of 2024 and then $450 by the end of 2025. Deere will rise to $500 within the year of 2027, $600 in 2029, $700 in 2030, $800 in 2032 and $900 in 2035.
Key Takeaways. Agricultural and construction equipment maker Deere exceeded profit and sales forecasts for its first quarter of fiscal 2024, though its revenue fell 8% from a year earlier. The company lowered its full-year guidance in anticipation of customers holding off on replenishing their fleets.
However, JD stock has struggled for more than a year amid slowing sales growth and concerns about the broader Chinese economy. Even with Wednesday's gain, shares of JD are down 8% since the start of 2024 and are off 46% over the past 12 months.
Hedge funds don't have many shares in Deere. The Vanguard Group, Inc. is currently the company's largest shareholder with 7.8% of shares outstanding. With 7.1% and 6.2% of the shares outstanding respectively, Cascade Investment, L.L.C. and BlackRock, Inc. are the second and third largest shareholders.
Deere is a dividend paying company with a current yield of 1.56% that is well covered by earnings. Next payment date is on 8th August, 2024 with an ex-dividend date of 28th June, 2024.
What is Deere Intrinsic Value: DCF (FCF Based)? As of today (2024-06-15), Deere's intrinsic value calculated from the Discounted Cash Flow model is $196.59.
Average PE of Nifty in the last 20 years was around 20.* So PEs below 20 may provide good investment opportunities; lower the PE below 20, more attractive the investment potential.
What is Deere Dividend Payout Ratio? Deere's dividend payout ratio for the months ended in Apr. 2024 was 0.17. During the past 13 years, the highest Dividend Payout Ratio of Deere was 0.57.
According to Deere & Company's latest financial reports and stock price the company's current number of shares outstanding is 276,800,000. At the end of 2024 the company had 276,800,000 shares outstanding.
The Federal Reserve announced at its June 2024 Federal Open Market Committee (FOMC) meeting that it would maintain the overnight federal funds rate at the current range of 5.25% to 5.5%.
The auto industry weathered a volatile environment in recent years but has settled into a positive trend in 2024. While challenges remain from higher interest rates and supply chain disruptions, the outlook for sales is upbeat and the industry is prepared to adapt to changing consumer preferences in coming years.
If you follow John Deere news, you have likely seen that they are planning a future of electrification, autonomy, and artificial intelligence. New John Deere tractors offer the latest in John Deere technology, and they plan to offer more throughout the future.
Tractors will be used a lot less on the farm of the future as more of their roles are taken over by spray and seed drones. Combines will run as often. But both will have big batteries that can be charged over night and run all day. And they'll be a lot quieter too, something the neighbors will appreciate.
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