Deere & Company (DE) is the world’s leading manufacturer of agricultural machinery with a market capitalization of $30.4 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 second 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 a downtrend over the past week and month. Deere has outpaced the Zacks Consensus Estimate in the trailing 4 quarters with an average beat of around 16.89%.

Earnings Ahead of Estimates

Deere posted in earnings of $2.03 per share, outpacing the Zacks Consensus Estimate of $1.57 by a wide margin of 29%. Excellent business lineup helped offset slowdown in global farm economy.

Revenues Came Ahead

Deere also beat on revenues. It reported second quarter revenues of $8.171 million, surpassing the Zacks Consensus Estimate of $7.601 million.

Key Stats/Developments to Note

Deere projects total equipment sales to decline 24% year over year in fiscal 2015, including a negative currency-translation effect of about 5%. Lower commodity prices and falling farm incomes are putting pressure on demand for agricultural machinery, especially for larger models. Deere expects to remain solidly profitable in 2015 and projects net income of around $1.9 billion, up its previous guidance of $1.8 billion.

Zacks Rank

Currently, Deere has a Zacks Rank #4 (Sell) 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.