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Deere & Company’s stock tanks after Q2 earnings miss estimates

Deere & Company (NYSE: DE) reported better-than-expected sales for the second quarter of 2019 but missed earnings estimates and lowered full-year guidance, causing the stock to fall over 4% in premarket hours on Friday.

The company reported worldwide net sales and revenue of $11.3 billion, up 6% compared to the prior year. Net sales rose 5% to $10.3 billion, surpassing the consensus estimate of $10.1 billion.  

On a GAAP basis, net income fell to $1.13 billion, or $3.52 per share, from $1.20 billion, or $3.67 per share, last year. Adjusted EPS rose 12% to $3.52 but fell short of the forecasts of $3.61.  

Net sales for the equipment operations increased 5% year-over-year to $10.2 billion. Deere recorded sales increases in the Agriculture & Turf and Construction & Forestry segments of 3% and 11%, respectively, helped by higher shipment volumes and price realization. Financial Services revenue grew 11% to $886 million.

The company’s financial services subsidiary John Deere Capital Corporation recorded a 14% growth in revenue to $703 million.

The company lowered its guidance for fiscal-year 2019 due to uncertainty in agricultural markets. Net sales and revenue are now forecasted to increase 5% versus the prior target of 7%. Net income attributable to Deere & Company is expected to be around $3.3 billion versus the previous guidance of $3.6 billion. Company equipment sales are expected to increase by about 5% for the year.

Industry sales of agricultural equipment in the US and Canada are forecast to be flat to up 5% for the full year of 2019, while industry sales in the EU28 member nations are forecast to be about flat. Industry sales of turf and utility equipment in the US and Canada are expected to be flat to up 5% for 2019. In forestry, global industry sales are expected to be flat to up 5% mainly due to improved demand in EU28 countries and Russia.

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