Important points from Deere & Company’s Q2 financial results

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on May 21, 2021
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  • Deere & Co reports better than expected earnings and revenue in fiscal Q1.
  • The U.S. manufacturer forecasts up to $5.7 of earnings per share this year.
  • Deere & Co shares are close to 35% up year-to-date in the stock market.

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Deere & Company (NYSE: DE) reported its financial results for the fiscal second quarter on Friday that topped analysts’ estimates for earnings and revenue. The manufacturing firm, however, warned that supply-chain pressures were likely to increase in the rest of 2021. CEO John May said:

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“While the company is clearly performing at a high level, Deere expects to see increased supply chain pressures through the balance of the year. We are working closely with key suppliers to secure the parts and components that our customers need to deliver essential food production and infrastructure.”

1. Financial performance

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Deere said its net income printed at $1.79 billion (£1.26 billion) in the quarter that concluded on 2nd May that translates to $5.68 per share. In the same quarter last year, its net income was capped at $666 million, or $2.11 per share.

The NYSE-listed company valued its revenue at $12.06 billion in Q2 that represents a 30% annualised growth. According to FactSet, experts had forecast the company to post $10.57 billion of revenue and $4.51 of EPS.  

2. Guidance for the full financial year

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For the full financial year, Deere forecasts a 25% growth in its large agricultural equipment sales in its biggest combined market – the United States and Canada. In February, it had estimated a narrower up to 20% growth instead.

The Illinois-based company expects its per-share earnings to fall in the range of $5.3 to $5.7 this year. In the prior quarter (Q1), Deere had noted an over 100% growth in net income.

3. Other notable figures

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At $11 billion, sales from equipment operations jumped 34% in the recent quarter. Deere noted a 26% increase in the cost of sales, while gross profit as a percentage of sales climbed from 32% to 34.3%.

Production and precision agriculture net sales in Q2 came in at $4.52 billion – an increase from $3.36 billion last year. In separate news from the U.S., fashion retailer Buckle also reported its quarterly financial results on Friday.

Impact on the share price

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Deere & Co shares were reported about 0.5% up in premarket trading on Friday. The stock is now exchanging hands at $361 per share versus $268 per share at the start of the year. Deere performed largely upbeat in the stock market last year with an annual gain of more than 50%. At the time of writing, it is valued at $111.34 billion and has a price to earnings ratio of 32.48.  

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