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Deere Reports Strong Fiscal 4Q17 Earnings

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Deere reports strong fiscal 4Q17 earnings

On November 22, 2017, Deere (DE) announced its fiscal 4Q17 earnings. DE reported earnings per share of $1.57 as compared to $0.90 per share in fiscal 4Q16. The company’s 4Q17 EPS rose 74.4% on a year-over-year basis. At the same time, Deere’s revenue also grew robustly during the quarter to record 23% growth to $8.0 billion as compared to $6.5 billion in 4Q16. Both of the businesses in the company’s equipment division saw revenue growth in the double digits.

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For fiscal 2018, Deere expects the growth to continue primarily driven by the acquisition of Wirtgen Group. The acquisition is expected to be completed in December 2017 and is expected to contribute revenue of approximately $3.1 billion in fiscal 2018. Accounting for all the acquisition expenses, Wirtgen is expected to contribute $75 million to the company’s operating profit.

For the complete report on Deere’s 4Q17 earnings, please read our series Reviewing Deere’s Fiscal 4Q17 Performance.

Update on Deere’s stock performance

Deere’s stock skyrocketed during the week ended November 24, 2017. DE rose 7.2% and closed at $145.50. As a result, the stock traded 14.6% above the 100-day moving average price of $126.93, indicating an upward trend in the stock. On a year-to-date basis, the stock has risen 39.8%. However, DE’s 14-day relative strength index of 82 indicates that the stock has moved into “overbought” territory temporarily and could see some selling pressure in the near term.

Investors who want to invest in Deere indirectly can invest in the iShares MSCI Global Agriculture Producers ETF (VEGI), which has invested 10.9% of its holdings in Deere. The fund also provides exposure to Monsanto (MON), Potash (POT), and FMC (FMC), which have weights of 14.1%, 4.5%, and 3.5%, respectively, as of November 24, 2017.

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