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monastery

It shattered Wall Street’s earnings estimates more Financial guidance for the fiscal year. However, the stock decreased. The current results have been impressive, but investors are worried about whether the current phase of high demand for agricultural equipment is over.

For the third fiscal quarter ending in June, Deere (stock ticker: DE) mentioned Earnings per share of $10.20 on equipment sales of $14.3 billion. Wall Street was looking for earnings of $8.22 per share on equipment sales of $14.1 billion. A year ago, Deere reported earnings of $6.16 per share on $13 billion in equipment sales.

The Monastery of Guidance was also raised on Friday. For fiscal year 2023, Deere now expects net income of between $9.75 billion and $10 billion. In May, the guidance range was $9.25 billion and $9.5 billion, while in February management expected $8.75 billion to $9.25 billion.

The $500 million increase nearly came close to the amount by which Deere beat Wall Street’s third-quarter estimates.

Deere stock was down 4.9% at midday, while

Standard & Poor’s 500
It was flat and

Dow Jones Industrial Average
It rose 0.1%.

It is a surprising move to make big profits. Worries about the top of the agribusiness cycle were creeping in. “Moving to a more cautious stance on Ag OEMs,” Baird analyst Meg Dupree wrote in a report earlier this week. OEM is short for original equipment manufacturer and refers to companies such as Deere.

Dealers are restocking stock, Dupree said, which is good for current results but less so for on-road performance. When their stocks are full, merchants don’t order more products.

Another reason for caution is that farm incomes in the United States decline as crop prices moderate, leaving farmers with less flexibility in purchasing equipment. The USDA projects about $151 billion in net farm income for 2023, down about 20% from 2022.

Dobre is also seeing gains in used farm equipment retrofit prices and costs starting to catch up to new equipment prices. He expected Deere to beat earnings estimates for the fiscal third quarter, but said, “We recognize a more rigorous nine-to-12-month (for stock) preparation.”