Daily Brief: Deere’s Earnings Kick The Crop Out Of Expectations, Which Bodes Well For The US As A Whole

Daily Brief: Deere’s Earnings Kick The Crop Out Of Expectations, Which Bodes Well For The US As A Whole

about 2 years ago3 mins

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Deere – the world’s biggest agricultural equipment-maker – posted better-than-expected quarterly results on Wednesday.

What does this mean?

It’s a good time to be a farmer: the US reckons they’ll earn 20% more money this year than last, and the most they’ve made in eight years. And Deere’s been happy to help: sales of its big and small equipment climbed by 23% and 17% respectively last quarter compared to the same time last year, helping push overall profit up by a better-than-expected 69%. And since the company reckons the boom in demand will continue, it gave a better-than-expected profit outlook for 2022 too. That’ll do, pig: investors initially sent Deere’s shares up 4% after the news.

Deere profits

Why should I care?

The bigger picture: America’s looking up.

Deere’s strong results are a good sign for America as a whole: the company’s an economic bellwether, meaning high demand for its products suggests the wider economy is firing on all cylinders. Data out on Wednesday backs that up: it showed that claims for US unemployment benefits fell to their lowest in 50 years last week, which could suggest the US’s economic recovery is still very much in full swing.

Unemployment claims

Zooming out: Will the Fed step up?

The US isn’t out of the woods yet, mind you: supply chain shortages are still plaguing the country’s businesses, with inflation at its highest level in 30 years. Combine that with Wednesday’s jobs data, and the Federal Reserve might need to start thinking about raising interest rates sooner than planned next year. But it’ll have to be careful: higher rates could end up slowing down price rises, sure, but they could also deter spending and knock the recovery off course altogether.

Keep reading for our next story...

Best Buy’s Earnings Came In Better Than Expected

Best Buy image

Go go better-than-expected earnings: Best Buy reported strong quarterly results earlier this week.

What does this mean?

Lockdowns might be over, but Best Buy’s shoppers were still sprucing up their homes with home theaters and kitchen appliances last quarter. That pushed up revenue from US stores that have been open for a year or more, but online shopping was still very much in favor: Best Buy’s online sales were over double what they were before the pandemic set in. That helped the retail giant boost its profit by a better-than-expected 28% compared to the same time last year. The company’s finding ways to keep customers coming back too: it reckons its new fixed-cost membership program – which offers perks like ongoing tech support – will help it stand out from its rivals going forward.

Best Buy sales
Source: The Wall Street Journal, Best Buy

Why should I care?

The bigger picture: It’s too good to be true.

Investors weren’t best pleased, mind you: they sent the company’s shares down 12% after the announcement. Last quarter’s revenue growth was, after all, a big drop from the quarters before, which might be a sign that shoppers have had their fill of big, one-off electronics splurges. Throw in rising costs from shipping and shortages, and things don’t look great for Best Buy’s bottom line in the next few months.

Best Buy stock
Source: Google Finance

Zooming out: Let there be oil.

At least the US has a plan to help manage those shipping costs: the country announced plans on Tuesday to release some of its oil stockpiles alongside China, Japan, India, South Korea, and the UK – a move that’ll ramp up the supply of the slippery elixir. They’re all hoping it’ll help limit the rapid rise of the oil price, which – given its necessity for almost every industry – could put a dent in the global recovery.

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