SweetyMommy/iStock Editorial via Getty Images
Deere (NYSE:DE) remained unmoved on Wednesday, ahead of its first quarter results on Feb. 15th, before market open, where investors would be keen to see if its already projected outlook for 2024 sees any improvements.
Even as the world’s largest farm equipment maker posted fourth-quarter earnings that beat analyst estimates, Deere expected weakness in 2024 as high borrowing costs kept demand for agriculture and construction machinery in check.
“We expect large ag equipment industry sales in the U.S. and Canada to decline 10% to 15%, reflecting softening sales on the heels of three years of strong demand,” said company executives on the results call in November.
Talking about factory production schedules in 2024 at large, CFO Josh Jepsen added, “The first quarter will embed lower production rates allowing for model year changeovers, required factory maintenance, and shutdowns during the holiday season.”
Jepsen expected the first quarter top line to be down 20% to 25% sequentially, similar to last year, and for first quarter margins to be 300 basis points to 400 basis points lower than the full-year guide.
On average, the consensus EPS Estimate is $5.25 and the consensus Revenue Estimate is $10.33B (-18.3% Y/Y).
Over the last three months, EPS estimates have seen one upward revision and eight downward. Revenue estimates have seen zero upward revisions and seven downward.
“With solid cash flow and disciplined inventory management, Deere can navigate the dynamic market landscape, maintain pricing power, and capitalize on emerging opportunities,” said SA Analyst Khen Elazar as he endorsed the company as a Hold.
The mixed outlook in the construction and forestry markets, compounded by uncertainties in global economic conditions and interest rate fluctuations, adds to the complexity of its operational environment, the analyst added.