Commodities & Metals

A Deere, a Cat & a Titan All Stuck in the Headlights (DE, CAT, TITN)

Deere & Co. (NYSE: DE) shares are going to be a drag today.  The giant manufacturer of farm and construction machinery posted $1.74 EPS on a 19% revenue fain to $7.47 Billion.  First Call had estimates at $1.75 EPS and $$7.61 Billion in revenues.

The company said that equipment sales are projected to increase about 20% for Q3 and up about 20% for Fiscal 2008.  Included in the forecast is about 5% of currency translation impact for the year.  Its previous guidance of +17%. 

The company has noted that rising material costs and the availability of various parts and components will pressure results for the rest of 2008. 

This can’t be a shock to anyone, except maybe that it wasn’t even worse, but Deere is looking for a 3% drop in equipment tied to housing and forestry.

If agriculture infrastructure companies can’t out-pace materials costs in the current Ag-trade environment, then what does this tell you about investing in that sector from here with new money after this sector has seen huge gains????

Deere shares are down almost 6% at $84.92 after closing at $90.19 yesterday; its 52-week trading range is $56.50 to $94.89.

This is also pulling shares of Caterpillar Inc. (NYSE: CAT) down by about 1.25% at $83.00 in pre-market trading; its 52-week trading range is $59.60 to $87.00.

But the real impact from this is going to be in Titan Machinery Inc. after its hugely successful post-IPO trading. Titan owns and operates full service agriculture and construction equipment stores. Its shares are down over 3% at $20.25 pre-market; and its post-IPO range is $11.50 to $24.50.

Jon C. Ogg
May 14, 2008