Deere’s stock surges toward record after profit and sales beats, upbeat outlook

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Shares of Deere & Co. surged 4.4% toward a record high in premarket trading Friday, after the agriculture and construction equipment maker reported fiscal third-quarter profit and revenue that were well above expectations, while providing a somewhat upbeat outlook. Net income for the quarter to Aug. 2 fell to $811 million, or $2.57 a share, from $899 million, or $2.81 a share, in the year-ago period. The FactSet consensus for earnings per share was $1.26. Total revenue fell 11% to $8.93 billion, beating the FactSet consensus of $7.50 billion. Within Deere’s business segments, agriculture and turf sales fell 5% to $5.67 billion, but topped the FacSet consensus of $5.23 billion, while construction and forestry sales dropped 28% to $2.19 billion but beat expectations of $1.62 billion. For the fiscal 2020, Deere expects agriculture and turf sales to fall 20% and construction and forestry sales to declined 25%, while current FactSet consensus estimates imply declines of 11.2% and 31.2%, respectively. “Although unsettled market conditions and related customer uncertainty are expected to have a moderating effect on key markets in the near term, we believe Deere is well-positioned to help make our customers more profitable and sustainable,” said Chief Executive John May. Deere’s stock has more than doubled (up 156.8%) year to date while the S&P 500 has gained 4.8%.
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