Deere’s other business, construction and forestry, is the one that is struggling as global markets remain sluggish. It is also the reason behind Deere’s lower revenue expectations. But Deere is not alone in ringing the cautious bell, so why punish it so hard?
If Deere reported 6% lower sales for the business this past quarter, Caterpillar Inc. (NYSE:CAT)’s sales tumbled a whopping 17% year on year. Deere investors can take heart that the largest construction-equipment company is projecting 7% to 12% lower revenue for 2013. Terex Corporation (NYSE:TEX) didn’t fare too well either with 5% lower sales in its last quarter, though it sounds upbeat about the rest of the year unlike peers, expecting between 6% and 12% higher revenue for the year.
Europe remains a concern for Deere as it accounts for nearly 20% revenue and makes up a good chunk of its forestry division sales. But if construction activity in North America ramps up, it might be able to offset some of the weakness in Deere’s forestry business.
The Foolish bottom line
Deere & Company (NYSE:DE) is an enviable mix of two businesses that are great to follow and be in. Agriculture will never go out of fashion unless the world stops eating. Spring planting in the U.S. is expected to hit a record this year. If the weather doesn’t play truant, it might as well turn out to be a great year for the tractor king. Moreover, Latin America too is expected to plant record crops this year which could help Deere outrun its own sales estimates. Meanwhile, any uptick in the construction market could mean extra revenue for Deere.
Neha Chamaria has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article The Perfect Time to Get This Stock on Your Radar originally appeared on Fool.com.
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