Deere Holds Hope for Strong 2011 (DE, CNH, AGCO)

Rising food prices may be hurting consumers around the globe, but they aren’t doing any damage to the farmers who raise the food and the companies that supply those farmers with equipment. Deere & Co. (NYSE: DE) reported EPS of $1.20 on revenue of $6.12 billion, well above estimates for EPS of $0.99 and revenue of $5.67 billion. These numbers are in-line with earlier earnings reports from CNH Global NV (NYSE: CNH) and AGCO Corp. (NYSE: AGCO), both of which beat expectations.

But the difference is outlook. Where CNH and AGCO saw the glass as half-empty, Deere sees a glass that is half-full. AGCO, in particular, was cautious about sales in Brazil, and came in with a full-year EPS estimate of $2.50-$2.75, where analysts had been predicting EPS of $2.94.

Deere, however, raised its profit forecast to $2.5 billion, up from its previous forecast of $2.1 billion. The company also expects sales growth of 18%-20%, up from a previous forecast of up 10%-12%. The expected profit calculates out to EPS of about $5.90, nicely higher than analysts’ estimates of $5.49.

Both AGCO and Deere expect sales of its farm machinery to remain strong in North America, but growth is unlikely to be as high as in either Europe or South America. Deere also expects sales in its construction and forestry equipment division to grow by 35% in 2011, primarily on sales to equipment rental firms and an improvement in forestry markets where wood and pulp prices are currently high and expected to stay that way.

Deere & Co. shares set a new 52-week high this morning of $97.36, putting its 52-week range at $52.73-$97.36.

Paul Ausick