Deere Stock Tumbles as Earnings Miss Expectations

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Deere

reported fiscal third-quarter earnings that missed analysts’ expectations and the stock fell more than 7% in premarket trading.

The company also reduced its earnings guidance range for the fiscal year to between $7 billion to $7.2 billion from $7 billion to $7.4 billion.

This is breaking news. Below is a Deere earnings preview.

s fiscal third-quarter earnings Friday morning. Investors will be looking for an update about agricultural production around the globe and how that production will affect food inflation in coming quarters.

As most U.S. consumers probably already realize, food inflation has been running north of 10% year over year for the past three months. Drought, Covid-19, the war in Ukraine and even oil prices have all moved prices higher. (Rising oil prices raise the costs for truckers delivering food to local stores.)

But prices have started to fall. Benchmark wheat prices are down more than 40% from March highs. And the U.N. World Food Price Index is down about 11% from its all-time high, set back in March. That index is still up about 13% year over year and about 48% from the onset of the Covid-19 pandemic.

Higher crop and food prices are tough for consumers to digest, but it does tend to boost demand for

Deere

products. For the quarter to be reported, Wall Street is looking for Deere to post per-share earnings of $6.65 from about $13 billion in equipment sales. A year ago, Deere reported about $5.25 in per-share earnings from $10.4 billion in equipment sales.

Deere is also likely to update full-year guidance on Friday. Back in May, Deere said it expected to make between $7 billion and $7.4 billion in net income.

Options markets imply the stock will move about 5%, up or down, following earnings. That’s similar to the post-earnings stock volatility over the past four quarterly reports.

Coming into Thursday trading, Deere stock is up about 6% year to date, while the

S&P 500
and

Dow Jones Industrial Average
are down about 10% and 6%, respectively.

Deere will host a conference call beginning at 10 a.m. ET, according to Bloomberg.

Write to Al Root at [email protected]