Deere & Company (DE – Analyst Report) is the world’s leading manufacturer of agricultural machinery with a market capitalization of $25 billion. It also produces a variety of commercial and consumer equipment; and a broad range of construction and forestry equipment. Deere’s financial services primarily provide credit services, which mainly finance sales and leases of equipment by John Deere dealers and trade receivables purchased from the equipment operations.

The company, best known for its John Deere tractors, has been challenged with falling demand for agricultural equipment as lower crop prices take their toll on the U.S farm income. Deere has thus resorted to production cutbacks, lay-offs, along with seasonal plant shutdowns to remain profitable in the wake of lower sales. On the contrary, Deere expects to be solidly profitable driven by increased global demand for food, shelter and infrastructure.

Investors have thus been eagerly awaiting the company’s latest earnings report. Let’s have a quick look at the Illinois-based company’s first-quarter fiscal 2016 earnings release.

Estimate Trend & Surprise History

You should note that the earnings estimate revisions for Deere depicted a neutral stance prior to the earnings release. The Zacks Consensus Estimate has remained stable over the last 30 days and currently stands at 71 cents for the first quarter.

Deere has outpaced the Zacks Consensus Estimate in the trailing 4 quarters with an average beat of around 28.57%.

Earnings

Deere posted in earnings of 80 cents per share in the first quarter, beating the Zacks Consensus Estimate of 71 cents. However, earnings plunged roughly 28.6% year over year due to sluggish global markets for farm and construction equipment.

Revenues

Deere reported first quarter revenues of $4.77 billion, falling short of the Zacks Consensus Estimate of $4.79 billion.

Key Stats/Developments to Note

Deere slashed outlook for fiscal 2016. The company projects total equipment sales to decline 10% year over year in 2016 and to be down about 8% in the second quarter of the year compared with year-ago periods. The projection includes a negative currency-translation effect of about 3% for the full year and for the second quarter. For fiscal 2016, net income attributable to Deere & Company is anticipated to be about $1.3 billion.

Zacks Rank

Currently, Deere has a Zacks Rank #1 (Strong Buy) depicting the weak demand for agricultural equipment. However, this could change following Deere’s earnings report which was just released.

Market Reaction

Deere shares were inactive following the release. It would be interesting to see how the market reacts to the results during the trading session today.