The world’s largest agricultural equipment maker under the iconic John Deere brand, Deere & Co DE, reported robust fourth-quarter fiscal 2023 results, beating estimates on both counts.
Despite the solid results, Deere shares dropped 3.1% on the day on a disappointing outlook for fiscal 2024 profits amid concerns about slowing equipment demand. This has put ETFs with the largest allocation to this farm equipment giant in focus. These funds include iShares MSCI Agriculture Producers ETF VEGI, Strive FAANG 2.0 ETF FTWO, First Trust Indxx Global Agriculture ETF FTAG, VanEck Agribusiness ETF MOO and VanEck Future of Food ETF YUMY.
Deere’s earnings per share came in at $8.26, well above the Zacks Consensus Estimate of $7.49 and up 11% from the year-ago earnings. Total net revenues decreased 4% year over year to $13.8 billion but beat the Zacks Consensus Estimate of $13.6 billion.
For fiscal 2024, the farm equipment giant expects net income between $7.75 billion and $8.25 billion, significantly lower than $10.2 billion in fiscal 2023. It expects net sales for Production & Precision Agriculture to be down 15-20% year over year in fiscal 2024, with declines of 10% to 15% for Small Agriculture & Turf and 10% for Construction & Forestry. The Financial Services segment's net income is anticipated to be around $770 million.
iShares MSCI Global Agriculture Producers ETF (VEGI)
iShares MSCI Agriculture Producers ETF provides global exposure to the companies that produce fertilizers and agricultural chemicals, farm machinery, packaged foods and meats by tracking the MSCI ACWI Select Agriculture Producers Investable Market Index. Holding 154 stocks in its basket, Deere takes the top spot at 22% share. American firms account for 61% of the assets, while Canada, India and Norway round off the next three spots.
iShares MSCI Agriculture Producers ETF is less popular and illiquid, with $171.2 million in AUM and around 35,000 shares in an average daily volume. It charges 39 bps in fees per year from investors (see: all Materials ETFs here).
First Trust Indxx Global Agriculture ETF (FTAG)
First Trust Indxx Global Agriculture ETF follows the Indxx Global Agriculture Index, which is a market-capitalization weighted index designed to measure the performance of companies, directly or indirectly engaged in improving agricultural yields. It holds 50 stocks in its basket, with John Deere occupying the top position at 9.9%. From the perspective of industrial exposure, materials takes the largest share at 48.8%, followed by 31.2% in industrials and 7.8% in consumer staples. Here again, the United States is the top country with a 31.2% share, while Germany takes a 19% share.
First Trust Indxx Global Agriculture ETF is an overlooked ETF, having accumulated $12.1 million in AUM and trading in an average daily volume of about 6,000 shares. It charges 70 bps in annual fees.
Strive FAANG 2.0 ETF (FTWO)
Strive FAANG 2.0 ETF follows the Bloomberg FAANG 2.0 Select Index and offers exposure to companies that are engaged in national security and natural resource security. It holds 52 stocks in its basket, with Deere occupying the top position at 8.4%.
Strive FAANG 2.0 ETF has accumulated $2.9 million in its asset base and trades in an average daily volume of 1,000 shares. It charges 49 bps in fees per year from investors.
VanEck Vectors Agribusiness ETF (MOO)
VanEck Agribusiness ETF is by far the most popular choice in the space, with an AUM of about $934.8 million and an average daily volume of 65,000 shares. It tracks the MVIS Global Agribusiness Index, which offers exposure to companies involved in agri-chemicals, animal health and fertilizers, seeds and traits, farm/irrigation equipment and farm machinery, aquaculture and fishing, livestock, cultivation and plantations, and trading of agricultural products.
VanEck Agribusiness ETF holds 60 securities in its basket, with John Deere capturing the third position with an 8.2% share. It charges 53 bps in annual fees (read: 5 ETFs Worthy of Special Thanks in 2023).
VanEck Future of Food ETF (YUMY)
VanEck Future of Food ETF is an actively managed ETF that seeks long-term capital appreciation by investing in companies engaged in Agri-Food technology and innovation, which encompasses industries and companies that are leading, enabling, supplying, disrupting, or benefiting from new environmentally sustainable agriculture and food products and services. It holds 43 stocks in its basket, with Deere taking the second spot at 6.1%. American firms dominate the portfolio with a 50.9% share.
VanEck Future of Food ETF has been able to manage $3.1 million in its asset base while trading in a volume of 1,000 shares per day on average. It charges 69 bps in fees per year.
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Free: See Our Top Stock and 4 Runners Up >>Deere & Company (DE) : Free Stock Analysis Report
VanEck Agribusiness ETF (MOO): ETF Research Reports
iShares MSCI Agriculture Producers ETF (VEGI): ETF Research Reports
First Trust Indxx Global Agriculture ETF (FTAG): ETF Research Reports
VanEck Future of Food ETF (YUMY): ETF Research Reports
Strive FAANG 2.0 ETF (FTWO): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
