The tractor manufacturer recovers from a big sell-off after revenue missed expectations
Thursday 26 May 2022 Author: Tom Sieber

Despite what looked like a decent set of quarterly figures, accompanied by a robust outlook, shares in agricultural equipment maker Deere & Co (DE:NYSE) fell sharply on the news (20 May).

Several factors accounted for share price reaction, one being the febrile market environment where investors are primed to react disproportionately to any hint of  bad news.

This is backed up by a subsequent recovery for the share price which, having fallen more than 14% at one point, is now down just 8% on its levels before the results were announced.

However, there were some more worrying details in the numbers. The company missed revenue forecasts for only the second time in the last 10 quarters – net sales were $12.02 billion rather than the estimated $13 billion.

Supply chain issues were the culprit. On the flipside, the company expects the situation to improve through the course of 2022 and there is no questioning the demand side of the equation. Chief financial officer Ryan Campbell told analysts the industry would not be able to meet all the demand that exists in 2022 due to ‘strong fundamentals’ in agriculture.

The company lifted its profit forecast for the year from a range of $6.7 billion to $7.1 billion to between $7 billion and $7.4 billion.

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