Deere is set to report fiscal year Q2 results tomorrow morning before the open with a call to follow at 10am ET.


The street is looking for Q1 EPS of $3.63 and revenue of $10.2 bln. If met, this would show EPS growth of 15.6% and revenue growth of 4.5%.



Last quarter, the co reported Q1 earnings of $1.54 per share, $0.22 worse than the S&P Capital IQ Consensus of $1.76; revenues (equipment sales) rose 16.2% year/year to $6.94 bln vs the $6.83 bln S&P Capital IQ Consensus.

Co issues in-line guidance for FY19, sees FY19 revs of ~7% to ~$35.7 bln vs. $35.69 bln S&P Capital IQ Consensus. Co reaffirms agriculture and turf industry outlook of flat to +5%. Company equipment sales are projected to increase by about 7% for fiscal 2019 compared with 2018.

Included in the forecast are Wirtgen results for the full fiscal year of 2019 compared with 10 months of the prior year. This adds about 1% to the company's net sales forecast for the current year. Also included in the forecast is a negative foreign-currency translation effect of about 2% for the year.

Some issues the co is facing/may be facing are the ongoing trade wars (Customers have clearly expressed their concern to Deere over tariffs and trade policies), recent flooding in the Midwest, which may have, at the least, pushed equipment orders further out, the recent decline and the the forward concern of farmer income, higher costs (Last quarter's results were hurt by higher costs for raw materials and logistics).

TECHS:


Investor psychology matters a great deal and the recent events that have had an effect on the farming sector have customers worried, at least to some extent, which is negative for farm equipment sales. I just don't see how investors/traders can feel warm and fuzzy about Deere's near-term.


TRADE: CAT MAY17 125P