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Nothing Runs Like a Deere

On Wednesday investors will be pouring over earnings from farm equipment maker, Deere & Co . What will they reveal?

Despite the recession, sales of Deere's agricultural equipment — such as tractors and harvesting machines — are thought to have remained relatively strong, helped by a crop boom last year that bolstered farmers' incomes.

In fact, sales of Deere's yellow-and-green farm equipment remain its largest source of revenue.

Rising crop prices, renewed government support for biofuels and other factors bode well for Deere and rival farm machinery makers, according to Jefferies & Co. analyst Stephen Volkmann.

"We expect equipment sales to hold up much better than most other machinery sub sectors," he wrote in a May 13 note. "Longer term, we believe reinvestment in (agricultural) infrastructure will be required to bring global supply/demand back into balance."

However, amid the bounty there are also some leaner expectations.

Deere’s other divisions, which make lawn mowers and construction equipment, among other products, have faltered as the global economic downturn has slowed consumer spending and made it more difficult for customers to get loans.

What should you expect?

On average, analysts expect a profit of $1.08 per share on revenue of $6.60 billion, according to a survey by Thomson Reuters. That's down from a profit of $1.74 per share on revenue of $8.1 billion in the year-earlier period.

What’s the trade?

A few weeks back rival CNH Global recorded a lousy quarter partly due to poor demand for farm equipment, explains Guy Adami. That doesn’t bode well for Deere.

And historically John Deere almost always disappoints, adds Tim Seymour.


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Trader disclosure: On May 19th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (AAPL), (WFC), (AGU), (SKF), (SDS), (F); Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Seymour Owns (AAPL), (BAC), (BBY), (BX), (FCX), (EEM), (INFY), (PBR), (RIO), (TTM); Finerman Owns (RIG); Finerman's Firm Owns (PBR), (RIG), (WMT); Finerman's Firm Owns (BAC) Preferred, (WFC) Preferred; Finerman's Firm Is Short (WFC), (BAC)