Deere shares dive after sales fall short of Wall Street estimates
- Deere reported a better-than-expected quarterly profit, helped by a lower effective tax rate.
- The company also raised its full-year sales and profit forecasts for the third time.
- But sales were lower than expected for the second straight quarter.
Deere reported a second straight quarter of lower- than-expected sales on Friday as demand remained sluggish for its trademark green tractors and harvesting combines, sending the company's shares down 7 percent in premarket trading.
Expectations were high for the company heading into the quarter, analysts said, as it has surprised Wall Street in the past few quarters with its ability to control costs amid weak demand.
Bumper corn and soybeans harvests in the United States have driven down crop prices, leaving farmers with less cash to spend on farm equipment.
Total equipment sales in the third quarter ended July 30 rose to $6.83 billion from $5.86 billion, but came in below the average analyst estimate of $6.92 billion, according to Thomson Reuters I/B/E/S.
However, Deere eked out a slim beat on profit, helped by lower effective tax rate.
The company also raised its full-year equipment sales forecast, mainly due to expected forex gains.
Deere said it now expects equipment sales to rise 10 percent, compared with its previous forecast of 9 percent. The latest forecast includes a foreign-currency benefit of about 1 percent.
The company said it expects 2017 net income attributable to Deere to be about $2.1 billion, up from $2.0 billion estimated previously.
Net income attributable to Deere jumped 31.3 percent to $641.8 million, or $1.97 per share, in the third quarter ended July 30, from a year earlier.
The company's shares fell more than 6 percent in premarket trading on Friday.