Deere & Company
), the worldwide producer and distributor of agricultural and
forestry equipment, construction equipment and engines, is slated
to report third-quarter fiscal 2014 results before the market opens
on Aug 13, 2014. In the last quarter, it posted a positive surprise
of 10.42%. However, on an average, Deere has posted a 7.81%
negative surprise in the last four quarters. Let's see how things
are shaping up for the second quarter.
Factors Influencing this Quarter
Deere reported second-quarter fiscal 2014 earnings of $2.65 a
share, down 4% due to lower shipment volumes, unfavorable effects
of foreign-currency exchange, and a less favorable product mix
partially offset benefits from price realization and a lower
effective tax rate.
For the third quarter of fiscal 2014, Deere expects equipment
sales to decrease around 4% year over year. For the fiscal 2014,
Deere trimmed its forecast by 4% from the previous expectation of a
3% dip. Deere, however, maintained its net income projection of
$3.3 billion for fiscal 2014.
Segment-wise, Deere projects Agriculture and Turf equipment
sales to decline 7% for fiscal 2014, down from the previous
expectation of a 6% drop. This includes a negative currency
translation effect of about 1%. Farm incomes are expected to be
lower than 2013, which will have a dampening effect on demand for
large farm equipment
Improved market conditions in the U.S and Canada will drive
growth in sales of turf and utility equipment. Global sales for
Construction & Forestry equipment will benefit from recovery in
the U.S. economy and a rise in housing starts. Global forestry
sales growth will be driven by economic development and higher
sales in the European markets.
Our proven model does not conclusively show that Deere is likely
to beat earnings estimates this quarter. This is because a stock
needs to have both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. This is not the
case here, as you will see below.
Deere has an Earnings ESP (Expected Surprise Prediction) of 0.00%.
This is because the Most Accurate estimate stands at $2.19 per
share, in line with the Zacks Consensus Estimate, resulting in
Zacks Rank #3 (Hold):
Deere has a Zacks Rank #3 which when combined with a 0.00% ESP
makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and #5 (Sell rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some other companies you may want to consider as our
model shows that these have the right combination of elements to
post an earnings surprise:
G&K Services Inc. (
) has an earnings ESP of +4.11% and a Zacks Rank #3.
Quanex Building Products Corporation (
) has an earnings ESP of +4.76% and a Zacks Rank #3.
Cintas Corporation (
) has an earnings ESP of +1.32% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
DEERE & CO (DE): Free Stock Analysis Report
CINTAS CORP (CTAS): Free Stock Analysis Report
QUANEX BLDG PRD (NX): Free Stock Analysis
G&K SVCS A (GK): Free Stock Analysis Report
To read this article on Zacks.com click here.