Deere & Company (DE) plans to announce third quarter results on Wednesday, November 20, 2013, at approximately 9:00 a.m. CT.
Wall Street anticipates that the heavy equipment maker will make a profit of $1.89 per share for the quarter. iStock expects the Deere to beat Wall Street's consensus number. The iEstimate is $1.95.
Deere & Company manufactures and distributes agriculture and turf equipment, and construction and forestry equipment worldwide.
The industrial goods company has a solid record of topping Wall Street's consensus estimate. The "Nothing runs like a Deere" company has bypassed expectation for 16 of the last 20 quarterly checkups. On average, DE beats the street by 49%. Take out two lopsided bullish surprises of 360% and 200% and the average falls to a still impressive 16.29%. Meanwhile, the four bearish misses averaged -16.10%.
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You'd think a company with that stellar track record would have corresponding price-performance in the days surrounding quarterly EPS announcements, but no. The stock slid 14 of the last 20 quarters by an average of -$2.83 with a range of -$0.11 to -$5.94. That works out to a typical fall of -4.07% with a max loss of -9.29%.
On happier EPS-driven days, DE 's price increased by an average of $2.07 (3.89%); ranging from $0.45 to $3.48 (0.54% to 8.04%).
Analysts downgraded their outlook during the quarter as the consensus EPS estimate dipped from $1.92 to start the quarter to today's $1.89. However, it's not earnings that could worry investors into another red reaction on Wednesday morning.
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According to producer.com, "Farm equipment manufacturers and sellers are planning to put fewer machines in farmers' hands in 2014." The site adds, "Combine sales in September fell almost 36 percent compared to the previous year, and fou! r-wheel drive tractors are off 53 percent year over year in that month."
WSJ.com chimes in with a similar view, "Sales of farm equipment wilted during October, foreshadowing a long-anticipated decline in North American farm machinery demand next year.
Retail sales of farm tractors in the U.S. and Canada slipped 1.5% last month from a year ago, according to unit sales figures released by the Milwaukee-based Association of Equipment Manufacturers." Uh-oh.
Fortunately, management did a good job of increasing margins in Q2, according to the latest 10-Q as operating margin increased 3.22%. However, those gains could be wiped out if sales continue to slide as WSJ.com and producer.com suggest. The second quarter balance sheet shows account receivables rising by 11.10% versus a 4.37% increase in sales. We also see inventory rising at nearly twice the pace of sales at 8.21%.
Overall: Deere & Company (DE) is likely to post better than expected EPS as the iEstimate suggests; however, forward guidance could damper spirits and rough the stock price up, again.
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