Strong demand for farm machinery in South American helped push up Deere's sales 26 percent in the latest quarter. As Fred Katayama reports, the company also issued a bullish forecast.
The company famous for its green tractors is reaping lots of green. Deere's quarterly profit mushroomed 79 percent on sales that surged 26 percent. Both handily beat analysts' forecasts. Helping rake in those results: strong sales of farm machinery in South America. Construction equipment sales also increased sharply. Deere issued a buoyant outlook. It sees sales in fiscal 2018 jumping 19 percent. An improving global economy, higher housing starts in the U.S., and increased activity in oil and gas could rev up sales of construction and forestry equipment. Seaport Global Securities senior analyst Michael Shlisky said in a note, "The headlines were positive and the outlook for next year appears strong, even though Deere is not projecting much recovery in cash receipts and farmer income." Deere's stock shot up at the start of trading Wednesday, adding to its 35 percent increase this year. Some analysts predict an improvement in grain prices will further lift the company's sales. Farmers are buying equipment to replace their aging fleet, and their inventories of new equipment are near their lowest levels in several decades.