Deere running in South America

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John Deere ( DE , quote ) reported a solid beat ($1.65 vs. $1.40 consensus) in fiscal Q1 while raising its outlook on FY 2013. The agriculture and turf business is better than expected, and will continue to be as long as soft prices stay in this range.

Image courtesy HCQ: http://commons.wikimedia.org/wiki/File:John_Deere_8345_R.jpg Farmers as a group in the U.S. have never made more money -- $219.6 billion according to the Department of Agriculture on February 11th.  Agriculture & turf sales rose 16% year over year (YoY) and 14.0% operating margins rose 180bp YoY.

The company forecasts 6% growth in agriculture & turf sales for 2013 (was +4%), driven by strength in South America with industry sales +10-15% (was ~10%).

The company is taking market share in Brazil and seeing massive investments in capacity, at a time when South America looks to have the best growth in the world.

Deere still has plenty of room to grow in South America in terms of the overall global revenue mix. The stock has had a good run into these numbers and none of this is a terrible surprise.

With multiples also fairly priced at 11.5x p/e there's no need to rush in.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , International , Stocks

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