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Deere Misses Q3 2018 Adjusted EPS Expectation, Cites Higher Costs

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Deere’s adjusted EPS

Deere (DE) reported its Q3 2018 results on August 17 before the markets opened. Its adjusted EPS was $2.59, reflecting a growth of 31.5% YoY (year-over-year). In Q3 2017, its adjusted EPS was $1.97.

Its Q3 2018 adjusted EPS excludes a gain of $0.19 per share due to tax reforms. Growth was fueled by higher revenue, but the continued increase in costs for raw materials and freight hampered its adjusted EPS. Wall Street analysts expected Deere to report adjusted EPS of $2.75.

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Deere’s fiscal third-quarter revenue

In its fiscal third quarter of 2018, Deere (DE) reported total revenue of $10.3 billion, inclusive of financial services and other revenue. That implies a 32% rise YoY. It reported revenue of $7.8 billion in Q3 2017.

Deere’s revenue from equipment operations came to $9.3 billion in the quarter compared to $6.83 billion in the corresponding quarter of the previous year. That was a rise of 36% YoY. Revenue from equipment operations exceeded Wall Street’s estimate of $9.21 billion.

Stock price reaction

As of the early morning hours of August 16, Deere had fallen 0.8% and was trading at $136.25. Its industrial peers Caterpillar (CAT) and Stanley Black & Decker (SWK) had risen 0.6% and 0.4%, respectively, while Honeywell (HON) was trading flat. We’ll release detailed insights into Caterpillar’s Q2 2018 earnings soon, so stay tuned.

Investors can hold Deere indirectly by investing in the iShares MSCI Global Agriculture Producers ETF (VEGI). VEGI has invested 12.8% of its portfolio in Deere.

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