Construction weak on oil slump
The monthly retail figures for construction equipment sales released by Deere & Company (DE) and Caterpillar (CAT) show a continued dip, despite the upturn in construction and increase in construction spending in 2016. The contrasting picture stems, in part, from the glut in construction machinery as more and more excavators and backhoes are being pulled from servicing the oil and gas market.
Caterpillar’s YoY (year-over-year) monthly retail sales in construction equipment in North America were down by 1%, 3%, and 9% in January, February, and March 2016, respectively.
Deere’s retail sales
In its February retail sales report, Deere reported double-digit declines in both first-in-the-dirt and settlement sales. First-in-the-dirt is the first transaction of a new machine and represents the combination of new retails and first rentals. Settlement refers to the combination of new retails and rental conversions. The number of settlements is seen as the number of final deliveries achieved in the month. Deere’s first-in-the-dirt and settlement sales fell by single digits in March.
New retail refers to the transfer of a new machine from a dealer to an end user and from Deere to independent rental companies. First rentals are the number of units rented to the first user from the units owned by Deere under rental programs. Retail conversion refers to the sales of a previously reported first rental to an end user.
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Continue to the next part for a look at Deere’s recent stock performance.