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What to Expect from Deere's Fiscal 1Q18 Earnings

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Part 2
What to Expect from Deere's Fiscal 1Q18 Earnings PART 2 OF 4

Deere’s Fiscal 1Q18 Revenues Set for a Big Jump

Deere’s expected fiscal 1Q18 revenue

Deere (DE) is expected to report revenues of $6.4 billion in fiscal 1Q18 from its equipment operations. This figure doesn’t include revenues from financial services. The expected revenue represents growth of 36.4% on a year-over-year basis, the highest first-quarter revenue since 2015. In 1Q17, DE reported revenue of $4.7 billion from equipment operations.

Deere&#8217;s Fiscal 1Q18 Revenues Set for a Big Jump

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Equipment operations

The projected growth in DE’s revenue for 1Q18 will mainly come from the acquisition of Wirtgen Group. DE completed the acquisition of Wirtgen Group on December 1, 2017. As a result, its two-month revenue will be reflected in DE’s 1Q18 revenue. Wirtgen Group will generate revenues of $3.1 billion in fiscal 2018. DE’s revenue will likely also see a boost from the acquisitions of Blue River Technology and Mazzotti.

Apart from the acquisitions revenue, the other driving forces for DE include favorable external developments like continued growth in construction spending. On a regional basis, the US and Canada are expected to grow 5% to 10%, the European Union is expected to grow 5%, South America is expected to grow 0% to 5%, while Asia is expected to be flat.

Also, Deere’s revenue will likely benefit from the weaker dollar. The dollar index, which measures the dollar movement against the basket of currencies, declined by 5.7% between November 1, 2017, to January 31, 2018.

Investors looking to invest in Deere can invest in the Agribusiness ETF (MOO), which has 8.5% of its portfolio in Deere. MOO’s other holdings include Monsanto (MON), CNH Industrial (CNHI), and FMC (FMC) with weights of 8.1%, 3.7%, and 2.6%, respectively, as of February 12, 2018.

In the next part, we’ll discuss Deere’s earnings estimate for fiscal 1Q18.

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