Deere & Co. shares dip on FY24 income outlook, Q4 earnings beat expectations

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Deere & Co. shares dip on FY24 income outlook, Q4 earnings beat expectations
Credit: © Reuters.

Deere & Co. (NYSE: DE ) reported a robust fiscal year 2023 with a net income surge to $10.166 billion, marking a 43% increase, despite a slight sales decline in the fourth quarter. The company's full-year net sales reached $61.251 billion. The Construction & Forestry segment particularly stood out in the fourth quarter, showing an 11% increase in sales and a significant 25% jump in operating profit, attributed to better pricing and higher shipment volumes.

However, Deere's shares experienced a pre-market downturn as the forecast for fiscal year 2024's net income of $7.75 billion to $8.25 billion did not meet analyst expectations of $9.3 billion. This outlook has led to a reassessment of the stock as a Moderate Buy, with a potential upside of 14.7% based on a target price of $438.95.

Despite the lower-than-expected income projection for FY24, Deere ended the fourth quarter on a strong note with earnings reaching $8.26 per share, surpassing last year’s $7.44 and analyst projections of $7.46 per share. Fourth-quarter revenues slightly declined by 1% but still exceeded expectations at $15.4 billion, compared to the anticipated $13.6 billion.

Chairman and CEO John C. May highlighted strategic investments aimed at ensuring sustained profitability through market fluctuations. Special items that influenced the company’s financials included the disposal of its Russian roadbuilding operation and adjustments to dealer financing incentive accounting methods.

The Financial Services segment saw an 18% decrease in quarterly net income due to derivative valuation adjustments and heightened credit loss provisions. To provide stakeholders with a clearer understanding of its financial status and performance across different segments, Deere released comprehensive financial tables alongside its earnings report.

InvestingPro Insights

Deere & Co. recently concluded a fiscal year with impressive net income results, and the company's financial health can be further illuminated with real-time data from InvestingPro. With a solid Market Cap of $110.2 billion and a P/E Ratio standing at 11.27, the company is trading at a low P/E ratio relative to near-term earnings growth. One notable InvestingPro Tip for Deere is that it has been aggressively buying back shares, a sign of management's confidence in the company's value. Additionally, the company is recognized for its high return on invested capital, which aligns with its substantial Operating Income Margin of 21.92% for the last twelve months as of Q3 2023.

Investors might also be interested to know that Deere has maintained dividend payments for an impressive 53 consecutive years, with the Dividend Yield as of the last data point at 1.41%. The company's strong track record of profitability is further supported by its 26.9% Revenue Growth over the last twelve months as of Q3 2023.

For those looking to delve deeper into Deere's financials and future prospects, InvestingPro offers a wealth of additional tips—15 in total—which are accessible through a subscription. Currently, InvestingPro is offering a special Black Friday sale, providing access to these insights with a discount of up to 55%. This promotional offer is a valuable opportunity for investors seeking comprehensive data and expert analysis to inform their investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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