John Deere, Inc. (DE, Financial) will release its second quarter 2014 earnings before the bell at 9:00 am, CST, on Wednesday, May 14, 2014. A simultaneous webcast of the earnings report is available at John Deere’s website under the Investor Relations tab starting at 9:00 am, CST. John Deere produces farming and construction equipment that are sold in over 29 countries.
Analysts Expect:
- EPS ranging from $2.02 to $2.77 with a target of $2.48
- Revenue ranging from $9.2 billion to $10.3 billion with a target of $9.7 billion
Revenue/EPS Recap
John Deere saw a 20% drop in revenue from the fourth quarter 2013 to the first quarter 2014. Revenue has consecutively decreased over the past four quarters although the company beat analyst estimates in Q1 2014, Q3 2013 and Q2 2013. Company guidance from Deere CEO Samuel Allen points to a 3% drop in income from the sales of large agricultural equipment in 2014. Most of Deere’s sales come from the United States and Canada, which makes the company very sensitive to changes in crop yield and fluctuating demand.
| Revenue | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 |
| Estimate | $6.2B | $8.7B | $9.2B | $9.8B |
| Actual | $6.9B | $8.6B | $9.3B | $10.3B |
| Difference | +700M | -100M | +100M | +500M |
Despite slowing revenues, Deere beat analyst EPS estimates for the past four consecutive quarters. CEO Allen expects the sales of large construction and forestry equipment to increase approximately 10% in 2014. Renewed European demand for forestry equipment along with increased worldwide construction projects has made up for the slowdown in agricultural equipment demand.
| EPS | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 |
| Estimate | $1.53 | $1.89 | $2.16 | $2.73 |
| Actual | $1.81 | $2.11 | $2.56 | $2.76 |
| Difference | +0.28 | +0.22 | +0.40 | +0.03 |
Competitors
John Deere’s primary competitor is Caterpillar (CAT, Financial) followed by Komatsu (KMTUF, Financial) and The Toro Co. (TTC, Financial). For the second quarter 2014, Caterpillar posted $13.241 billion in revenue and exceeded the EPS estimates of $1.24 by reporting $1.61. Analysts are waiting to see how Deere’s actual revenue and EPS for the second quarter 2014 stacks up against Caterpillar.
| Revenue | DE | CAT | TTC | KMTUF |
| Price | $94.07 | $104.60 | $64.82 | $22.09 |
| Market Cap | $34.9B | $65.4B | $3.6B | $21.06B |
| Total Revenue | $7.7B | $13.2B | $446M | $19.10B |
| P/E (TTM) | 10.20% | 17.80% | 25.70% | 13.52% |
| EPS (TTM) | 9.24% | 5.88% | 2.52% | 1.63% |
| Est 2015 EPS Growth | -8.89% | 14.40% | 12.09% | 25.40% |
Trade Considerations
Analysts are bullish on John Deere and rate the company as buy and outperform. The stock is still on an uptrend that started on Feb. 5, 2014, when it closed at $84.70. The stock currently trades in the $93.00 to $94.00 range with support and resistance at $92.00 and $95.00, respectively. John Deere is a well-managed corporation that analysts believe will remain in an uptrend for several more years. A buying opportunity may present itself should Deere beat the estimates for the fifth straight quarter in a row.
