John Deere stock drops on lowered full-year profit forecast

Shares of Deere & Company (DE) are dipping as the farming equipment manufacturer lowered its full-year profit forecast to $7 billion from a previous range of $7.50 billion to $7.75 billion. The US Department of Agriculture forecasts that 2024 net farm income will total $116.1 billion, a 25.5% year-over-year decline.

Market Domination's Julie Hyman and Josh Lipton discuss a potential deterioration in the global agricultural space.

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This post was written by Nicholas Jacobino and updated by Luke Carberry Mogan.

Video transcript

All right, let's also take a look at John Deere speaking in the state of the economy, a look here at the US, the company lowering its full year profit forecast, declining food crop prices has seen farmers buying less tractors and other farming equipment.

We're looking at losses here of just nearly 3% when you take a look at some of the other details within this report.

And again, we're closely watching this because of what it signals about the larger US economy right now, but cutting its annual profit outlook with farmer demand, slowing here, the US farm income is set to slump this year.

So again, a bit of a worrisome sign here for the company.

And as a result, we're seeing shares move to the downside here ma Well, it's interesting as you mentioned, this is bellwether as well for the overall agricultural footprint here.

One analyst from Bloomberg Intelligence saying that the reduced outlook despite better than expected second quarter earnings, it was largely driven by a decline in the small agriculture and turf business and we production and precision profitability.

That could also be an indication given that it was almost 8% below consensus of a deterioration in the global agricultural space amid elevated inventories as well.

We've been talking about the companies that have been able to handle their inventories versus those that have struggled.

This is a concern for a company like John Deere particularly given the volatility that we've seen with their inventories as we've come out of the pandemic here.