It's been a week to forget for many investors. The Dow Jones Industrial Average
That company is Deere
Fourth-quarter revenue increased for the company to $8.6 billion from $7.2 billion a year ago, a 20% over last year. Likewise, net income also grew, up a whopping 47% to $670 million. That was good for $1.62 earnings per share, handily beating the $1.43 per share that analysts were expecting.
On top of that, Deere also said that high demand will lead to even better results in 2012, and the company raised its next-year guidance. This is especially noteworthy, considering that the company is often conservative in its guidance.
So what drove Deere's monster earnings? Equipment sales were huge for the company, jumping 20% in the quarter from last year. Deere also said that it expects full-year equipment sales to be up 15%.
The company was also able to increase overall sales volume and equipment prices in the fourth quarter, which were necessary to help Deere offset higher research and development expenses and increased investment costs in new products in 2011 to comply with new EPA pollution standards.
But what did everyone else do?
But not all construction and farm-machinery companies were quite as impressive. Engine maker Cummins
The whole picture
Beyond Deere, the company's earnings and optimistic guidance are also good news for the agricultural sector as a whole. Farmers are continuing to see strong demand for agricultural commodities. This is one of the sectors that has best been able to better weather the economic standstill, and Deere's numbers show that. As the agricultural sector continues to see strong demand, farmers are more and more likely to order new equipment, and that's good news for Deere and all the companies mentioned here.
So what does this mean for investors? Well, we saw an excellent quarter from a relatively solid dividend producer (yielding 2.3%) that sports a return on equity of 43% and has encouraging growth prospects for the future. Obviously, investors liked what they saw from Deere, sending the stock up on a day in which the major indices were down across the board.
I'm impressed by the company's emerging-market growth potential and the continued strength of the agriculture sector. That's why I'll be watching Deere closely as we head into 2012. If you'd like to keep tabs on Deere or any of these companies, simply follow the links below to add them to your Watchlist.