Deere & Company misses on Q3 earnings as costs rise

Yahoo Finance Live anchors discuss third-quarter earnings for Deere & Company.

Video Transcript

- Oh dear. It was a tricky quarter for John Deere as it saw a miss on earnings, despite beating revenue estimates. CEO John May citing, quote, "Higher costs and production inefficiencies driven by the difficult supply chain situation for causing a dent in Deere's most recent quarterly results." In John Deere, Julie, you tracked very closely, down about 5% in the pre-market, profit margins under pressure across the board.

- Yeah. A lot of this has to do with this sort of dynamic supply chain issues that we've seen happen for so many other companies that they're just not able to necessarily meet demand, that it's costing them more to make the stuff that they are putting out there. This company says for the year, net income is going to be $7 billion to $7.2 billion, which is a cut from its original forecast. Although, not a substantial cut, we're not talking a Foot Locker-sized cut, for example.

- Kohl's cut.

- Definitely not a Kohl's-sized cut. So the company talks about higher costs and production inefficiencies driven by the difficult supply chain situation. Also, large agricultural equipment sales for the US and Canada are going to still rise for 15%, but the prior forecast was for an increase of 20%. So demand is still there, it's just moderating a little bit.

- Yeah. I'm surprised to see John Deere now the second hottest ticker on the Yahoo Finance platform, interesting. We mentioned GM's valuation a couple of minutes ago. John Deere is not selling at any super expensive price to earnings multiple, only 14 times forward earnings estimates for John Deere below the broader stock market. So maybe another stock on sale, who knows.

- Well, and something else to keep an eye on, of course, when we talk about John Deere is what's happening with agricultural prices, of course, right? And we have seen a little bit of moderation in soybean prices, for example, and some of the other AGs. And so what does that imply in terms of demand for the equipment that folks use to plant and harvest this kind of stuff? Now, Deere is not just an agricultural company, of course. It provides equipment for other stuff, but that is still the biggest part of its business.

- I'd love to drive one of those machines. We got to reach out to John Deere. Like, one of those big giant machines on the farm. I'd love to get on one of those. It seems so fun.

- And a lot of what they're doing too is actually investment in technology. You and I talk a lot about electric vehicles, we talk about technology going into old kinds of machines. The same kind of stuff is happening with farm machinery and equipment, by the way. It's not just in things that consumers drive, it's stuff that farmers drive and other people in industry drive as well.

- There's nobody in there. Look at that.

- Exactly. There's a lot of new bells and whistles that are going into a lot of these tractors.

- No, I love it.

- See, look he's controlling on his phone.

- He's excited about it, I'd be excited about it too. I'd love to give that a try. So the Julie trade, John Deere AG and biotechs. And biotechs, you like biotechs.

- Yeah, is that the Julie trade? OK.