6 months ago • 2 mins
What’s going on here?
Deere, the leading farm equipment manufacturer, reported a bumper crop of profit last Friday.
What does this mean?
Last year’s agricultural shortages saw farmers rake in record crop prices, and they took that golden opportunity to upgrade their equipment. And even now, with crop prices dropping and Deere’s products getting Deer-er, demand’s still looking fresh. The appetite for everything from new tractors to spare parts helped the firm smash through profit expectations last quarter – marking a 36% increase from the same time the year before, and notching up Deere’s best-ever second-quarter results. Plus, with the orders still pouring in, the firm upped its profit forecast for the remainder of the year – and investors, betting on a bumper harvest, sent Deere’s stock skyward.
Why should I care?
Zooming in: The plow and the stars.
Deere’s precision agriculture segment – which uses sensors and data analytics to boost crop yields – emerged as the real star last quarter. Thing is, many farms are tucked away in remote areas, where good ol’ network connectivity is as rare as a hen’s tooth. And that’s a problem when your offerings include high-tech autonomous machines. Now, though, the firm’s turning to the heavens for a solution, betting on satellite communications to plug the gap where signal’s sparse. Deere’s already trialing the tech, and if it goes well, analysts think it’ll boost the firm’s overall appeal – while opening some new software-service revenue streams.
The bigger picture: Hanging on for Deere life.
Deere’s an economic bellwether, meaning that its performance offers a glimpse into the financial health of the US in general. And these results bode pretty well for the world’s biggest economy: after all, the firm’s juicy profit hardly suggests that the country’s flirting with disaster. And while an easy escape from high inflation might seem far-fetched – history says that a recession’s the usual antidote – a growing number of experts do think that a softer landing could materialize.
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