Stock markets often see volatile moves during holiday weeks, as fewer professionals on Wall Street are present to participate in trading. That said, light trading volume can sometimes leave stock markets in a holding pattern, and that seemed to be the case on Wednesday morning. Major market benchmarks opened with only modest changes from Tuesday's close, with some rising and others falling slightly.
Yet the individual companies that continue to report earnings are offering very different views of the current state of the economy. Shares of farm equipment specialist Deere (DE -0.18%) moved higher following the company's most recent release of financial results, but high-end department store retailer Nordstrom (JWN -0.69%) wasn't able to show the same level of optimism about macroeconomic conditions. It's all one big economy, but what Deere and Nordstrom said revealed two different sides of it.
Deere reaps a healthy harvest
Shares of Deere rose 3% early Wednesday morning. The farm equipment stock is within 10% of an all-time high, and its fiscal fourth-quarter financial numbers for the period ending Oct. 30 showed continued strength in its underlying business.
The latest readings from Deere were favorable. Quarterly revenue jumped 37% year over year to $15.54 billion, finishing a fiscal year in which sales were 19% higher than in the previous year. Quarterly net income surged 75% to $2.25 billion, and that produced earnings of $7.44 per share.
Deere had positive results from across its business. The best performer by far was its production & precision agriculture segment, where sales jumped 59% and operating profit more than doubled on healthy margin expansion.
Yet Deere also saw great numbers in its other segments. Small agriculture & turf sales rose 26% to boost operating profit by 46% from year-ago levels, while the construction & forestry segment got a 20% sales gain that helped boost operating profit by 53%.
Best of all, Deere sees strong conditions continuing into the coming year. The equipment maker projected sales gains of 15% to 20% in fiscal 2023 for the production & precision agriculture segment, with more-modest gains of 10% for construction & forestry and 0% to 5% for small agriculture & turf. That bodes well for Deere's prospects to remain a leading stock even in a bear market.
Nordstrom cuts its profit projections
Moving in the other direction, shares of Nordstrom fell 8%. The retailer's fiscal third-quarter financial report for the period ending Oct. 29 showed that even higher-end retail shoppers are struggling in the recent inflationary environment.
Nordstrom's quarterly numbers were mixed. Net sales fell almost 3% year over year, with gross merchandise value falling 2.5%. A shift in the timing of Nordstrom's key anniversary sale had a calendar-related impact, but the company saw declining revenue both in its full-price namesake stores and in its off-price Nordstrom Rack chain.
Nordstrom lost $0.13 per share for the quarter, although after adjusting for one-time charges related to supply chain technology, adjusted earnings of $0.20 per share were better than some had expected.
Challenges in retail persisted, as Nordstrom worked hard to manage inventory levels while meeting customer demand. Overhead expenses remained at heightened levels, hurting profits. Yet even with the tough conditions, the retailer is opening new stores and expects to make substantial relocations and openings in the coming year.
Nordstrom still believes it can grow revenue 5% to 7% for the full fiscal year, posting adjusted earnings of $2.30 to $2.60 per share. That would imply a relatively inexpensive valuation for the stock, but shareholders still seem skeptical that the holiday season will go as well as management hopes it will.
