John Deere Finishes Strong

Up and down, up and down, up and down. So goes John Deere’s stock chart for this year, and the Nov. 19 announcement that the company beat profit projections for its fiscal fourth quarter sent the stock up nearly 4 percent to just shy of $50 a share, its high point for the year.

“While market conditions remain below normal, favorable customer response to new products has contributed to higher sales and more efficient production levels,” noted John Deere Chairman and Chief Executive Officer Robert Lane.

In particular, overseas agricultural sales and cost cutting benefits drove the $68 million, fourth-quarter profit the big green manufacturer announced. The stock also benefited from company executives’ predictions that 2003 will feature even stronger performance, includes sales increases up to 10 percent.

“Great numbers, a great quarter and a great outlook,” noted Joel Tiss, a stock analyst with Lehman Brothers. Tiss said John Deere reversed the financial downturn it faced earlier this year thanks to new product development, global marketing and the aforementioned cost-cutting moves.

The company’s sales climbed 10 percent to nearly $3.5 billion compared to the same quarter last year. For the year, earnings were $319.2 million compared with a loss of $64 million last year.

Other analysts aren't as upbeat about the company's 2003 prospects. "We think the construction equipment cycle could act as a drag on the company's profitability in 2003," noted Merrill Lynch analyst Stephen Haggerty.

The author is Editor/Publisher of Lawn & Landscape magazine and can be reached at bwest@lawnandlandscape.com.