over 3 years ago • 2 mins
Deere & Co reported quite the fruitful quarterly harvest on Friday: the American agricultural equipment maker’s revenue and profit beat investors expectations 🚜
Sure, Deere’s revenue was 11% lower than the same time last year and profit was down 10%, but those were smaller drops than investors were expecting. Maybe they hadn’t accounted for the fact that farmers still needed to replace old machinery, or that US government subsidies had encouraged them to buy more of what they needed 🇺🇸 Or maybe they’d overlooked China’s agreement to step up its purchases of US soybeans, which might’ve given the countryfolk an incentive to spruce up their kit.
All that might explain why the equipment-maker raised its earnings forecast for the rest of its financial year. That’s only one more quarter, admittedly, but plenty of the world’s biggest companies have opted out of making any predictions what with the looming uncertainty of coronavirus 🦠 Then again, Deere did warn that a resurgence of the pandemic could make its prediction meaningless...
Deere’s stock initially rose 5% on Friday, likely because of its tidy update. Optimistic analysts were feeling good about the company’s relative stability this year, and might be hoping the lockdown-driven gardening boom will keep demand for its products going strong 🌷 Not least because Deere’s managed to offset falling sales by cutting costs – something other industrial giants, like Caterpillar, have struggled to do as effectively.
Industrial companies like Deere and Caterpillar are “economic bellwethers”. That is to say, demand for Deere’s products gives a good indication of how busy US farmers are keeping, while demand for Caterpillar’s machinery – which is sold in the construction and mining sectors – offers clues about global economic activity and growth 🌎 And that’s precisely why investors keep such close tabs on their updates.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.