Deere Q2 earnings: ‘ag space will be a growth story for a long time’

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on May 19, 2023
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  • Deere reports a strong Q2 and raises its guidance for the full year.
  • BK's Boris Schlossberg shares his view on the industrial stock.
  • Deere stock is currently down 15% versus its year-to-date high.

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Shares of Deere & Company (NYSE: DE) are trading up this morning after the equipment maker reported its financial results for the second quarter that handily topped Street estimates.

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Deere stock up on raised guidance

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Investors are cheering also because the industrial giant cited “healthy demand” and raised its guidance for the full-year net income as well.

Deere is now calling for its net income to fall in the range of $9.25 billion to $9.50 billion. On CNBC’s “The Exchange”, Boris Schlossberg of BK Asset Management said:

I do [like the stock]. They’re leader in the agriculture space. Agriculture will be a growth story for a very long time. Most importantly, operationally they are doing very well.

Wall Street also currently has an “overweight” rating on this industrial stock.

Deere Q2 earnings snapshot

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  • Net income printed at $2.86 billion versus the year-ago $2.10 billion
  • Per-share earnings also climbed significantly from $6.81 to $9.65
  • Sales went up 30% to $17.39 billion as per the earnings press release
  • FactSet consensus was $8.58 a share on $14.89 billion in revenue
  • Cost of sales increased about 20% versus the same quarter last year

Sales from individual business segments

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Sales from all three segments: Production & Precision Agriculture, Small Agriculture and Turf, Construction & Forestry were well above last year and ahead of expectations. Schlossberg added:

They’re putting so much value added to their products via software, via AI, which I think will be a very powerful thing going forward. They’ll collect a lot more high margin revenue.

Versus its year-to-date high, Deere stock is down about 15% at writing. Deere had raised guidance in February as well when it published its Q1 results as Invezz reported here.

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