[Updated: Nov 26, 2021] Deere Income Update
Deere & Company It recently reported its Q4 FY21 earnings, which were better than our estimates. The Company reported sales (equipment operations) of approximately $10.3 billion (an increase of 19%) compared to our estimate of $10.4 billion. While construction and forestry equipment revenues were up 14%, agricultural and turf equipment revenues were up more than 20%, driven by higher volumes as well as improved value realization. Our Dashboard is on deere revenue The company provides more details on the segment.
Looking at the bottom line, the company reported earnings of $4.12 per share compared to $2.39 in the prior year quarter. Earnings were comfortably above our forecast of $3.98 per share and the consensus estimate of $3.96 per share. Better price realization meant higher operating margins for the company. In fact, operating profit of $1.4 billion in Q4 was up 32% year-over-year.
Following a solid performance in Q4FY21, Deere provided a solid outlook for 2022, with agriculture and turf sales expected to be up approximately 20% and construction and forestry sales between 10% and 15%. The company also expects its net income to increase 13% at the midpoint of its guided range.
We have also updated our model after the Q4 release. We have revised our fiscal 2022 sales forecast (equipment operations) to approximately $45.4 billion, seeing continued growth in both segments. Thus, we also expect EPS to be higher by $22.53 as compared to $18.99 in Fiscal Year 2021. Given these changes to our revenue and earnings forecast, we have deere valuation Based on $447 per share, $22.53 expected adjusted EPS and a 20x P/E multiple for fiscal 2022, up 28% from its current level of $349, meaning DE stock is currently undervalued and has the potential to see higher levels. In the near term, in our view.
[Updated: Nov 19, 2021] Deere Q4 Earnings Preview
Deere & Company It is scheduled to report its fiscal fourth quarter results on Wednesday, November 24. We expect revenue to be below Deere, but above earnings, the consensus estimates. While the gradual opening up of economies coupled with an increase in vaccination rates has led to a sharp jump in demand for overall equipment in recent quarters, a trend is likely to continue in the third quarter, weighing the company’s overall performance with higher raw materials There could be cost and supply chain headwinds. That said, our forecast suggests that Deere’s valuation is $434 per share, which is approximately 22% higher than its current market price of $357. Our interactive dashboard analysis Deere’s past earnings There is additional detail.
Note that a month-long strike by workers in Deere has just ended yesterday, with Deere agreeing to improve basic production wages, bonuses and pension funding for workers.  The company may resort to increased production overseas, coupled with rising wages in the US, to meet the increase in demand for its equipment.
(1) Revenue is expected to be lower than the consensus estimate
Trefis estimates Deere’s Q4 fiscal 2021 total revenue to be about $10.4 billion, down 2% from the consensus estimate of $10.6 billion. The company saw a strong rebound in the demand for construction as well as farm equipment over the past few quarters. In Q3 fiscal 2021, revenue rose 32% to $10.4 billion, as the company continued to see a rebound in construction equipment demand, along with an increase in spending on farm equipment. In fact, sales in the construction and forestry segment were up 38%, while small agriculture and turf sales were up 32%, and production and precision agriculture sales were up 29%. Our Dashboard is on deere revenue Provides more details on segment-wise revenue breakup.
2) EPS likely to be above consensus estimates
Deere’s Q4 fiscal 2021 earnings per share is expected to be $3.98 per Trefis analysis, slightly above the consensus estimate of $3.96. Deere’s net income of $1.7 billion in Q3 represented a large increase of 2x from its profit of $811 million in the prior year quarter, due to higher sales and declining operating expenses. While Deere saw a higher price realization in recent quarters, aiding overall margins, Q4 may see some pressure on margins, primarily due to inflationary headwinds. Looking to the full fiscal 2022, we expect EPS to more than double to $18.86, aided by both revenue growth as well as margin expansion.
(3) The stock price is estimated to be 22% higher than the current market price
going by us deere valuation, With an EPS estimate of around $18.86 and a P/E multiplier of 23x in 2021 (as opposed to 26x in 2020), this translates to a price of $434, which is 22% higher than the current market price of $357. While the coronavirus outbreak has had a significant impact on the deere business in FY20, due to low demand for its equipment, the demand for both agriculture as well as construction equipment has seen a strong rebound so far this year, This trend is expected to continue. near term.
Note: P/E multiples are based on year-end share price, and reported (or expected) adjusted earnings for the full year.
While DE stock looks like it could be turning higher, it’s helpful to see how its peers stack up. Compare DE Stock with its peers Summarizes how Deere compares with peers on important metrics. You can find more useful comparisons like this here peer comparison,
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Returns Nov’21 MTD  YTD  2017-21 
DE Return 8% 37% 257%
S&P 500 Returns 3% 25% 110%
Trefis MS Portfolio Returns -2% 49% 304%
 month-to-date and year-to-date as of 11/26/2021
 Cumulative Total Return since 2017
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