Deere & Company (DE) is the world’s leading manufacturer of agricultural machinery with a market capitalization of $30.7 billion. It also produces a variety of commercial and consumer equipment; and a broad range of construction and forestry equipment. Deere’s financial services primarily provide credit services, which mainly finance sales and leases of equipment by John Deere dealers and trade receivables purchased from the equipment operations.

The company, best known for its John Deere tractors, has been challenged with falling demand for agricultural equipment as lower crop prices take their toll on the U.S farm income. Deere has thus resorted to production cutbacks, lay-offs, along with seasonal plant shutdowns to remain profitable in the wake of lower sales. On the contrary, Construction & Forestry equipment sales are expected to grow as the leading indicators for construction activity continue to trend up, boding well for Deere.

Investors have thus been eagerly awaiting the company’s latest earnings report. Let’s have a quick look at the Illinois-based company’s third quarter fiscal 2015 earnings release.

Estimate Trend & Surprise History

Investors should note that earnings estimate for Deere for fiscal 2016 and 2017 has been portraying an uptrend over the past 60 days. Deere has outpaced the Zacks Consensus Estimate in the trailing 4 quarters with an average beat of around 21.61%.

Earnings Ahead of Estimates

Deere posted in earnings of $1.53 per share in the third quarter, beating the Zacks Consensus Estimate of $1.47. However, earnings declined 34% year over year due to lower demand for agricultural and construction equipment.

Revenues Came Ahead

Deere reported third quarter revenues of $6.840 billion, falling short of the Zacks Consensus Estimate of $7.129 billion.

Key Stats/Developments to Note

Deere projects total equipment sales to decline 21% year over year in fiscal 2015 and to be down about 24% for the fourth quarter compared with year-ago periods. The projection includes a negative currency-translation effect of about 4% for the full year and 5% for the fourth quarter. For fiscal 2015, net income attributable to Deere & Company is anticipated to be about $1.8 billion.

Zacks Rank

Currently, Deere has a Zacks Rank #2 (Buy) depicting the weak demand for agricultural equipment. However, this could change following Deere’s earnings report which was just released.

Market Reaction

Deere shares were inactive following the release. It would be interesting to see how the market reacts to the results during the trading session today.

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