Deere & Company (NYSE: DE) is the leading manufacturer of farm and forestry equipment. The Company operates four major business segments: agricultural equipment, commercial and consumer equipment, construction and forestry and credit. Deere is engaged in advanced seeding technology and has benefited from the strong global demand for food and rapid rise in crop prices.
Deere & Company reported third quarter 2008 revenues increased 17% to $7.7 billion from $6.6 billion in the third quarter in 2007. Net income for the quarter increased 7% to $575.2 million from $537 million in 2007. Agricultural sales increased 35% in the quarter to $4.5 billion from $3.4 billion and operating profit increased 47% to $634 million in the third quarter 2008 from $431 million in the prior year comparable period.
Deere is projecting equipment sales to increase approximately 21% for the full year 2008 and 29% for the fourth quarter. The Company expects net income to be around $425 million for the fourth quarter. Sales from agricultural equipment are forecasted to increase about 38% for the full year 2008.
Deere & Company's stock closed at $66.82 on August 14, 2008, down 29.5% from its fifty-two week high of $94.89. Deere's stock is currently selling at a price earnings multiple of 14. It appears based on their third quarter earnings results as well as their revenues and earnings growth rates that the stock is a bargain. The Company is showing very strong growth in its agricultural business segment which should continue to grow in the future as the demand for food will likely increase as emerging markets and economies sustain their robust growth. This growing global demand for food and rising crop prices should benefit companies such as Deere & Company who provide the necessary products and technologies needed to address this serious "food crisis."
References:
http://www.reuters.com/article/pressRelease/idUS123872+13-Aug-2008+PRN20080813
Company Third Quarter 2008 Results News Wire
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