Shares of the Illinois-based agricultural, construction and forestry machinery manufacturer, Deere & Company (DE), fell by ~5% even before the opening on Wednesday.
The stock dropped below its 50-day trend-line once again this week, after the company reported weaker-than-expected earnings and sales for its fiscal fourth quarter.
DE reported a net income of $748 million, or $2.30 per share, excluding adjustments, for the fourth-quarter while revenue stood at $8.34 billion (+18%). However, analysts estimated an earnings per share of $2.43 and revenue of $8.594 billion (+21%), meaning Deere widely missed the mark.
Hit by the ongoing U.S. - China trade war, Deere's earnings got dented by higher transportation and material costs. Prudent cost management and effective price actions have somewhat helped the company to stage a recovery, but not to the extent the street was hoping for.
Unfortunately for Deers, tariffs have affected the manufacture of tractors, harvesters and other farm equipment, as well as equipment for forestry and construction. Tariffs have raised the cost of steel which is a key raw material in DE’s machines, thus worsening the situation for the company. Additionally, the company also had to contend with rising freight and logistics costs owing to truck driver shortage, which again took a toll on profitability.