MOLINE, Ill.—Deere & Co., the world's largest maker of agricultural equipment, will give investors read on the state of the world's farmers when it reports its fiscal fourth-quarter earnings Wednesday before the stock market opens.
WHAT TO WATCH FOR: Investors will be looking to learn more about the health of the agriculture sector worldwide, and they'll watch for details about how much Deere's costs are increasing.
Throughout the year, Deere's costs for raw materials and research and development have been increasing, so even though sales have improved, the higher costs have reduced Deere's profits. Deere is in the midst of rolling out an entire line of new products to comply with new EPA air pollution regulations, so its R&D costs are significantly higher than before.
Deere has predicted its equipment sales would grow 25 percent in its 2011 fiscal year. The company also forecast an annual profit of $2.7 billion.
WHY IT MATTERS: Deere's results indicate how well farmers worldwide are doing because it is the biggest maker of farm equipment. Deere also makes construction and forestry equipment, such as backhoes, excavators, riding mowers and leaf blowers, but those are a small portion of Deere's business compared to farm equipment.
WHAT'S EXPECTED: The analysts FactSet surveyed are expecting Deere to report earnings per share of $1.43 on revenue of $7.91 billion.
LAST YEAR'S QUARTER: Last year, Deere reported net income of $457.2 million, or $1.07 per share, in the company's fiscal fourth quarter. That included $7.2 billion revenue as equipment sales improved, especially in the United States and Canada.