uploads///Part  DE Pre earnings Q

Deere’s Fiscal Q3 2018 Revenues Could Breach $9 Billion


Aug. 15 2018, Updated 11:05 a.m. ET

Deere’s expected fiscal third-quarter revenues

Deere (DE) is expected to report revenues of $9.21 billion in the third fiscal quarter from its equipment operations. The figure doesn’t include revenues from financial services. The expected revenues represent 34.9% growth on a year-over-year basis. In the third fiscal quarter of 2017, Deere reported revenues of $6.83 billion from equipment operations. If Deere meets the revenue expectations, it would be the highest third-quarter revenues since the third fiscal quarter of 2013.

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What could drive Deere’s revenues?

The projected revenue growth for equipment operations is expected to be driven by the continued contribution from Wirtgen Group, which was acquired in December 2017. Deere estimates that Wirtgen will contribute ~18% to Deere’s revenue growth in the third quarter. The Blue River Technology, Mazzotti, King Agro acquisitions will likely improve Deere’s revenues. In the previous quarter, Deere said that it wants to increase the prices of its products to recover increased raw material and fuel costs. Investors will have to wait and see if increased prices impact Deere’s revenues in the third quarter. New product launches are also expected to improve the volume, which would increase the revenues.

The US dollar’s strong recovery could have a negative impact on revenues. The US Dollar Index measures the dollar’s movement against a basket of currencies. From May to July, the US Dollar Index gained 3%. Deere’s currency hedge could still drive the company’s revenue growth.

CNH Industrial (CNHI), Caterpillar (CAT), and FMC (FMC) registered revenue growth of 16.2%, 24%, and 92%, respectively in the latest quarterly earnings.

Investors could hold Deere indirectly by investing in the iShares MSCI Global Agriculture Producers ETF (VEGI). VEGI has invested 12.7% of its portfolio in Deere as of August 14.


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