The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how agricultural machinery stocks fared in Q1, starting with Deere (NYSE:DE).
Agricultural machinery companies are investing to develop and produce more precise machinery, automated systems, and connected equipment that collects analyzable data to help farmers and other customers improve yields and increase efficiency. On the other hand, agriculture is seasonal and natural disasters or bad weather can impact the entire industry. Additionally, macroeconomic factors such as commodity prices or changes in interest rates–which dictate the willingness of these companies or their customers to invest–can impact demand for agricultural machinery.
The 6 agricultural machinery stocks we track reported a slower Q1. As a group, revenues missed analysts’ consensus estimates by 1.6% while next quarter’s revenue guidance was 2% below.
After much suspense, the Federal Reserve cut its policy rate by 50bps (half a percent) in September 2024. This marks the central bank’s first easing of monetary policy since 2020 and the end of its most pointed inflation-busting campaign since the 1980s. Inflation had begun to run hot in 2021 post-COVID due to a confluence of factors such as supply chain disruptions, labor shortages, and stimulus spending. While CPI (inflation) readings have been supportive lately, employment measures have prompted some concern. Going forward, the markets will debate whether this rate cut (and more potential ones in 2024 and 2025) is perfect timing to support the economy or a bit too late for a macro that has already cooled too much.
While some agricultural machinery stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.8% since the latest earnings results.
Best Q1: Deere (NYSE:DE)
Revolutionizing agriculture with the first self-polishing cast-steel plow in the 1800s, Deere (NYSE:DE) manufactures and distributes advanced agricultural, construction, forestry, and turf care equipment.Deere reported revenues of $15.24 billion, down 12.4% year on year. This print exceeded analysts’ expectations by 14.3%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ EBITDA estimates.
Deere pulled off the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 16% since reporting and currently trades at $407.
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Lindsay (NYSE:LNN)
A pioneer in the field of center pivot and lateral move irrigation, Lindsay (NYSE:LNN) provides a variety of proprietary water management and road infrastructure products and services.Lindsay reported revenues of $139.2 million, down 15.4% year on year, falling short of analysts’ expectations by 3.6%. The business performed better than its peers, but it was unfortunately a mixed quarter with an impressive beat of analysts’ earnings estimates but a miss of analysts’ organic revenue estimates.
However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $113.65.
Weakest Q1: Alamo (NYSE:ALG)
Expanding its markets through acquisitions since its founding, Alamo (NSYE:ALG) designs, manufactures, and services vegetation management and infrastructure maintenance equipment for governmental, industrial, and agricultural use.Alamo reported revenues of $416.3 million, down 5.5% year on year, falling short of analysts’ expectations by 2.9%. It was a slower quarter as it posted a miss of analysts’ earnings estimates.
As expected, the stock is down 11% since the results and currently trades at $171.88.
The Toro Company (NYSE:TTC)
Ceasing all production to support the war effort during World War II, Toro (NYSE:TTC) offers outdoor equipment for residential, commercial, and agricultural use.The Toro Company reported revenues of $1.16 billion, up 6.9% year on year. This result came in 8.1% below analysts' expectations. It was a disappointing quarter as it also produced underwhelming earnings guidance for the full year and a miss of analysts’ operating margin estimates.
The Toro Company had the weakest performance against analyst estimates among its peers. The stock is down 9.2% since reporting and currently trades at $82.60.
Titan International (NYSE:TWI)
Acquiring Goodyear’s farm tire business in 2005, Titan (NSYE:TWI) is a manufacturer and supplier of wheels, tires, and undercarriages used in off-highway vehicles such as construction vehicles.Titan International reported revenues of $532.2 million, up 10.6% year on year. This result missed analysts’ expectations by 2.8%. It was a softer quarter as it also logged a miss of analysts’ earnings estimates and underwhelming EBITDA guidance for the next quarter.
Titan International achieved the fastest revenue growth among its peers. The stock is down 16% since reporting and currently trades at $7.16.
This content was originally published on Stock Story
