Earnings Preview: Deere & Co.

Deere Expected to Post 1st-Quarter Profit of 78 Cents Per Share on $5.03 Billion in Revenue

NEW YORK (AP) -- Deere & Co., one of the world's largest producers of farm equipment, reports earnings for the fiscal first quarter on Wednesday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Deere, like other manufacturers, has worked to boost its exports in the face of a slowing U.S. economy. At the same time, it's benefited from higher farm prices around the world that have been fueled by increased ethanol production.

Deere's results come after fourth-quarter earnings announcements by its chief competitors, CNH Global NV and Agco Corp. CNH's fourth-quarter profit fell short of Wall Street predictions and it also issued 2008 guidance that disappointed investors.

The Dutch company predicted a 10 percent to 15 percent increase in total equipment sales, but added that it expects North American sales of construction equipment to be down 5 percent to 10 percent as a result of the residential construction slump.
Meanwhile, Agco said it swung to a fourth-quarter profit, but issued a 2008 outlook below average estimates, projecting a modest industry increase in worldwide demand for farm equipment.

BY THE NUMBERS: Analysts polled by Thomson Financial expect a profit of 78 cents per share on $5.03 billion in revenue.

ANALYST TAKE: "Our Buy rating on Deere reflects our view that results will continue to be driven by improving global agriculture industry fundamentals and the company's leadership position in the farm machinery industry," Seth R. Weber of Banc of America Securities wrote in a recent note to investors.

"We expect rising farm income, sustained high crop prices, low global crop inventories, improvements in Brazil, and bio-fuel-related crop demand to continue to support strong farm equipment demand in 2008."

STOCK PERFORMANCE: During the quarter, Deere shares rose about 14 percent to peak at $177.04 on Dec. 3 before a 2-for-1 stock split the next day. After the split, Deere shares traded relatively flat and ended the quarter at $87.56.

Adjusted for dividends and stock splits, Deere shares rose about 13 percent during the quarter.
So far this calendar year, Deere shares are up about 11 percent to close Friday at $82.46.