Deere & Company
) $27.8 million expansion of the John Deere Product Engineering
Center in Waterloo has received a five-year partial property tax
abatement from the Waterloo City Council. 75% of the project's
taxable value would be exempt from taxation for the first year,
decreasing by increments of 15% over the five years until the full
valuation comes on the tax rolls.
Earlier in May, Deere announced plans to invest approximately $28
million in expansion of the tractor testing laboratories of its
Product Engineering Center in Cedar Falls. The expansion involves
nearly 62,000 square feet of additional space and improvements to
the existing engineering center's infrastructure. The project has
been designed to meet the demand for larger agricultural
The announcement of Deere's expansion plans came shortly after
the Iowa Economic Development Authority approved job-retention
incentives for the project. The expansion allows Deere to retain 29
full-time positions at its Cedar Falls location instead of
transferring them to other tractor testing facilities. Positions
retained are in the areas of engineering and product development.
Given the increasing global demand for food, shelter and
infrastructure, we believe that the long-term outlook for Deere
remains strong. However, in the near term, despite high levels of
farm income, farmer sentiment regarding capital goods purchase is
getting more conservative due to lower commodity prices.
Going forward, Deere expects equipment sales to decrease around
4% year over year. For fiscal 2014, Deere revised its forecast to a
4% decline from the previous expectation of a 3% dip. The company,
however, maintained its net income projection of $3.3 billion for
Segment-wise, Deere projects Agriculture and Turf equipment
sales to decline 7% for fiscal 2014, wider than the previous
expectation of a 6% fall. This includes a negative currency
translation effect of about 1%. Farm income is expected to be lower
than 2013, which will likely dampen demand for large farm
Deere will nevertheless benefit from a recovery in the
construction sector and stabilization in the European economy.
Furthermore, given its strong balance sheet, the company can
maintain its commitment toward shareholders by increasing dividends
and repurchasing shares.
Moline, IL-based Deere is engaged in the worldwide production and
distribution of agricultural and forestry equipment, construction
equipment and engines. The company sells products in the U.S. and
Canada through branch offices as well as distributors and operates
through dealers to resell products internationally.
Deere currently holds a Zacks Rank #3 (Hold). Some better
performing stocks worth considering in the sector include
Blount International Inc.
EnPro Industries, Inc.
Altra Industrial Motion Corp.
). While Blount International and EnPro sport a Zacks Rank #1
(Strong Buy), Altra Industrial Motion carries a Zacks Rank #2
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