Please ensure Javascript is enabled for purposes of website accessibility

Deere Blows Past Analyst Estimates, but Takes Guidance Way Down

By Howard Smith - May 22, 2020 at 2:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The farm equipment maker offered new fiscal 2020 guidance that has net income down 45% versus 2019.

Deere & Company (DE 1.72%) announced earnings today, reporting fiscal second-quarter net income of $2.11 per share, beating analysts expectations of $1.72 per share. The big earnings beat came with new guidance, however. The company expects a 45% decline in net income for the full year compared to last year. 

Deere chairman and CEO John May, said the company's focus has been to operate safely and protect the health and well-being of its employees through the COVID pandemic, while also satisfying customer requirements. While the company continued to operate to fulfill customer needs as an essential business, its factory in Moline, Illinois also began producing a planned 225,000 face shields to be distributed to healthcare workers in communities where Deere operates. 

John Deere green grain harvester in the field

Image source: Getty Images.

While second-quarter sales also came in ahead of estimates, they were 18% below year ago levels. Hardest hit was Deere's construction and forestry segment, where year-over-year sales decreased 25% and operating profit declined 72%. 

The company sees sales of its agricultural division down 10% to 15% for fiscal 2020, while sales for construction are forecast to decline 30% to 40%. The other area with significant negative impacts is the finance group. John Deere Capital Corporation (JDCC) saw net income drop 69% in this recent quarter. The capital arm has been hit by "a higher provision for credit losses, unfavorable financing spreads, and increased losses and impairments on lease residual values," the company said. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Deere & Company Stock Quote
Deere & Company
DE
$368.16 (1.72%) $6.24

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/14/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.