Investopedia: If You Don't Mind Volatility, Deere Could Still Do Alright

Deere (NYSE:DE) is a curious stock. It seems all too common for investors to bid these shares up into earnings (up about 12% this time), only to be disappointed when management's guidance sounds more conservative than they wanted. And yet, more often than not, the company does fine (or better) the next time around. While this pattern can be frustrating for investors who get stomach aches over the week to week moves in their portfolio, it's an opportunity for investors to make entries (or exits) at better prices.

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Seeking Alpha: Titan International Deflates After Disappointing Results

The CEO of Titan International (TWI) is hardly a wallflower, and that makes for the occasional interesting headline or entertaining press release. But whatever the entertainment value, Wall Street is a brutally results-oriented place and Titan's fourth quarter earnings didn't pass muster.

While investors have reason to be concerned about the extent to which a weak global construction market and a "weak everything" market in Europe will hurt results over the next year or two, and what the company's long-term free cash flow generation will look like, this pullback could be an opportunity to add shares of an increasingly global off-highway wheel and tire business.

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Titan International Deflates After Disappointing Results

Seeking Alpha: Sauer-Danfoss Should Be Past The Worst

Industrial companies have been reporting pretty grim results for the 2012 calendar fourth quarter, and guidance for the first half of 2013 isn't looking particularly strong either. The market being what it is, though, investors are looking past these current difficulties and already baking in their assumptions of a solid recovery. As Sauer-Danfoss (SHS) was one of the first ag/construction equipment companies to see significant weakening, I think the company's relative stability could be a sign of improving conditions, and I think there is still room for these shares to go higher.

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Sauer-Danfoss Should Be Past The Worst

Investopedia: Titan Machinery's Model is Still Risky, But The Growth Is There Today

The markets have seen plenty of stories like Titan Machinery (Nasdaq:TITN) - stories where a company uses debt to consolidate a highly-fragmented, low-margin industry where the hope is that scale can ultimately improve those margins. Many of these stories hit the rocks when acquisition-fueled growth peters out and/or operational missteps make the debt load unmanageable. There's no guarantee that Titan Machinery will meet this same fate, but investors would do well to realize the risks that come with the apparent undervaluation here.

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Investopedia: Can Deere Run Again In 2013?

Investors who bought into the "it's different this time" stories on major equipment and component companies such as Caterpillar (NYSE:CAT), Deere (NYSE:DE), Cummins (NYSE:CMI) or Joy Global (NYSE:JOY) got a hard lesson in 2012, as weakness in Europe, China and South America ultimately hit sales, profits and valuations. With the global Ag markets looking stronger relative to mining and construction, however, it's worth asking if Deere could be a solid stock to own on a macro rebound in 2013 and a lengthening of the Ag cycle.

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Investopedia: Will A Change At The Top Shift Sauer-Danfoss's Trajectory

It has been a few months since I last wrote on small industrial company Sauer-Danfoss (SHS), and the interim has not been especially kind to the company. With large exposures to China and Europe, but without the same breadth of products and depth of customer relationships, Sauer-Danfoss has seen a much larger setback in revenue and profits than larger rivals like Eaton (ETN) and Parker Hannifin (PH) and OEMs like Caterpillar (CAT) or Deere (DE).

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Will A Change At The Top Shift Sauer-Danfoss's Trajectory?

Seeking Alpha: Deere Smacks Into The Wall Of Worry

It may be true that "Nothing Runs Like a Deere," but it also makes for an unpleasant sound when it smacks into the reality of tougher operating conditions. Deere (DE) typically enjoys a premium valuation within the heavy machinery space -- a recognition of the company's market share, strong brand equity, and reliable performance history. Unfortunately, Deere is showing that it's not immune to the larger economy or operating missteps.

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Deere Smacks Into The Wall Of Worry

Investopedia: Is Titan Machinery Overpaying For Growth?

Investors have been getting more and more nervous about companies tied to heavy vehicle sales in markets like agriculture and construction. To some extent, then, I think the Street was looking for an excuse to approach Titan Machinery's (Nasdaq:TITN) earnings with a skeptical eye. While equipment sales remain robust, margins have weakened and the company's aggressive expansion plans may be coming at too high of a cost if the ag sector has indeed seen its best days.

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Seeking Alpha: Agco An Unlikely Bright Spot In Q1

As an investor with a value inclination, I'm always a bit intrigued when a company seems unfairly or illogically maligned relative to its competitors. Given its strong performance in an otherwise mediocre quarter for industrial companies, AGCO (AGCO) springs to mind as one such candidate. Although AGCO's historical financial performance has been pretty volatile, it seems like the market treats this company as an afterthought compared to CNH (CNH) and Deere (DE).

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Agco An Unlikely Bright Spot In Q1

Investopedia: Titan Machinery Delivering Giant-Sized Growth

Titan Machinery (Nasdaq:TITN) highlights some of the risks and rewards of highly-valued growth stories. While the stock did very well in response to blowout earnings, the stock had actually languished over the past year with some pretty unnerving dips along the way. Although the company's cash flow situation is going to be a hang-up for some value investors, this remains an interesting company all the same.

Closing the Year With a Bang
Titan Machinery certainly delivered the goods when it came to fiscal fourth quarter results. Revenue jumped 65%, on a 66% increase in equipment sales. Growth was strong in both equipment categories, as agriculture sales rose 58% and construction sales rose 120%. While Titan has been a busy acquirer, same-store sales growth was up a robust 41%.

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Seeking Alpha: Growing Markets Could Lift Manitowoc Higher

Manitowoc (MTW) is an odd industrial company, as it combines a fairly steady food service equipment business with a leading (but extremely cyclical) crane business. Counting on the future to be just like the past is admittedly dangerous, but if Manitowoc's crane business follows pretty consistent historical patterns, investors may have several more years of improving sales and cash flow to look forward to, as well as an undervalued stock.

Food Service - Smaller, But Usually More Profitable
Although the crane business produces more revenue for Manitowoc, the food service business is both more consistent and generally more profitable across a full cycle. For better or worse, this is a story unlikely to produce a lot of surprises either good or bad.


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Growing Markets Could Lift Manitowoc Higher

Seeking Alpha: Caterpillars, Deer(e)s, And CNH - Oh My

Cyclical industries have this way of making investors look stupid, as the "it's different this time" crowd goes hand-to-hand with the "doom is just around the corner" contingent. Luckily for CNH Global (CNH) investors, the company is so well-diversified around the globe that a slowdown in one area can be offset by stronger conditions in another.

Like Deere (DE), CNH management has been a little conservative/cautious of late, and sell-side analysts seem to be getting a little more nervous about the health of the North American farm equipment market and the global construction equipment market. That said, CNH's overseas position is intriguing, particularly if management can start to execute better.

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Caterpillars, Deer(E)s, And CNH - Oh My

Investopedia: Titan More Than Just Going Along For The Ride

It's good to be a manufacturer of agricultural, construction, and/or mining equipment today. Not surprisingly, it's also good to be a manufacturer of the parts and components that these OEMs need to build their machines. With major share of the North American off-highway wheel market and growing opportunities overseas and in follow-on markets like mining, Titan International (NYSE:TWI) may not be a giant, but the growth it's delivering to shareholders is hardly lilliputian.

Closing the Year on a Roll  
Titan reported 73% revenue growth to end its fiscal year, boosted in part by the acquisition of Goodyear's (NYSE:GT) Latin Am farm tire business, but also by strong overall demand. Agriculture sales rose 39% this quarter, while earthmoving/construction sales jumped 59%. Consumer sales were also a strong contributor to this quarter's total, with year-on-year comparisons being of negligible value.

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Investopedia: If You Believe In A Construction Revival, Consider Terex

Last year was brutal for crane and construction machinery manufacturer Terex (NYSE:TEX), but the company may not be getting enough credit for some of its strategic moves. The acquisition of Demag will make Terex a more diverse business (operationally and geographically), while signs of life in construction could fuel a return to decent margins and returns.



A More Constructive Fourth Quarter
Looking at a range of companies like Caterpillar (NYSE:CAT), Manitowoc (NYSE:MTW), and Deere (NYSE:DE), it's pretty clear that construction spending was solid on a global basis in the fourth quarter. Terex went along for the ride with reported sales growth of nearly 48% (and almost 20% excluding the acquisition of Demag).


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Seeking Alpha: Trying To Reconcile Deere's Double-Digit Growth With Peaking Demand

Deere (DE) is certainly not an ordinary heavy machinery company. Farmers tend to be loyal to brands and Deere has one of the most valuable brands in the world, let alone just in farm machinery. The trouble with Deere as a stock, though, is trying to balance out what is clearly a strong North American market with the past cyclicality of this business and industry.

A Few Hiccups In The Start To The Year
On balance Deere had a solid start to its fiscal year, but there were a couple of details that concern me as they relate to growth expectations. Total revenue rose 11% for the quarter and equipment revenue rose by a like amount - giving the company a better start to the year than expected.


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Trying To Reconcile Deere's Double-Digit Growth With Peaking Demand

Investopedia: Can Investors Grow Wealth With Mosaic?

Farming is an up-and-down business, and so too are the businesses for farming inputs like equipment and fertilizer. In the case of Mosaic (NYSE:MOS), investors have been trying to digest the news of production cuts across the sector and weighing that against what looks like a pretty healthy North American planting season. Although volatility means this is a poor candidate for long-term buy-and-hold investors, today's valuation on Mosaic makes it worth a look from investors seeking shorter-duration trading opportunities.


A Decent Fiscal Second Quarter
In many cases, Wall Street doesn't care much about what fertilizer companies like Mosaic or Potash (NYSE:POT) report for earnings, as so much attention is given to forward-looking comments on volume and pricing. Nevertheless, Mosaic did alright this time around. (For related reading, see 2011 Look Back At Agriculture.)

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Seeking Alpha: Sauer-Danfoss Still Looking Sweet

Although it was an ugly summer for off-road vehicle components maker Sauer-Danfoss (SHS), the company nevertheless ended 2011 as one of the relatively few industrial stocks to post double-digit gains. While OEM order rates for off-road equipment like wheel loaders, bulldozers, harvesters, and so on have started to taper off a bit, there is a significant difference between “slow” and “stop” and Sauer-Danfoss looks poised for another strong year in 2012. With minimal institutional support, Sauer-Danfoss is off the radar of many investors, but the value here still merits a serious examination.

Off-Road Still On Track
Sauer-Danfoss is basically in the business of making components for off-road vehicles. Sauer-Danfoss builds the transmissions that make machinery like excavators, combines, and trucks go, as well as other components like steering units, valves, pumps, controls, and motors that allow these vehicles to operate the buckets, shovels, headers and so on that represent the “business end” of the vehicle. While there is an after-market component to the business and Sauer-Danfoss can work with custom orders and retrofits, a lot of the company's sales are to the OEM manufacturers like Caterpillar (CAT), CNH (CNH), Deere (DE), Sandvik (SDVK.PK), and so on.

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Sauer-Danfoss Still Looking Sweet

Investopedia: CAT's Costs Rising, But Revenue Rising Faster

This summer saw almost indiscriminate selling across the industrial stock sectors. Companies like Caterpillar (NYSE:CAT), Cummins (NYSE:CMI), Eaton (NYSE:ETN), and Dover (NYSE:DOV) were all swept up in this rush to sell, even though the underlying businesses are so very different. As Caterpillar reminded the Street with its earnings report, the global construction and mining business is still quite healthy and there is plenty of business left to be done.

Solid Third Quarter Results  
Analyst estimates on CAT fell more than 10%, in the weeks and months before the earnings report, and the company did well, relative to those lowered expectations. Revenue, excluding finance, rose 44% as reported, or 11% on a sequential basis, and 28% on an organic basis; virtually all of that growth came from increased volume. Including the finance operations, consolidated revenue rose 41%.

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Investopedia: Running Like A Deere

When crop prices are high, there is a go-to line-up of stocks for theme investors to play. Fertilizer names like Potash (NYSE:POT) and Mosiac (NYSE:MOS) usually catch a bid, as do seed companies like Syngenta (NYSE:SYT). And then there are the machinery companies - stocks like AGCO (Nasdaq:AGCO), CNH Global (NYSE:CNH) and the biggest of them all, Deere (NYSE:DE). Whether the logic always works out as expected (high crop prices produce more cash for farmers who can buy new equipment) or not, these have been bullish times for crops and bullish times for Deere's stock. 

The Quarter That Was
Whether the byproduct of high crop prices, better credit access, more optimism among farmers, or some combination, Deere delivered another strong quarter. Revenue rose 30% this period to over $5.5 billion, with agriculture (and turf) up 21% and construction (and forestry) up 81% from a low base. Although that was a solid jump in sales, it was nevertheless below the average analyst estimate of $5.67 billion.

Like most heavy machinery manufacturers, Deere's business is more profitable when the factories have solid throughput. To that end, higher revenue helped enable improved gross margin (up about 150 basis points from last year). Deere's management also deserves praise for holding the line on operating expenses, as operating income more than doubled and the operating margin expanded by more the four points. As a result, though Deere came up short on revenue the company handily surpassed the average EPS estimate. (For more, see 4 Things to Know About Earnings Season.)

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An Odd Report From Deere

This quarter's earnings report from Deere (NYSE:DE) is a bit of a puzzler. Then again, a quick look at the analyst estimates going into this report shows that there was not a firm sense of just how this large agricultural and construction machinery company was going to do. 

There was a nearly 10% spread between the high and low revenue estimate for the quarter, and a 45% spread for the EPS estimates. Caterpillar (NYSE:CAT) likewise has a large spread for its next quarter, but non-industrials like Wal-Mart and Procter & Gamble have much narrower spreads - suggesting there is a wide gulf between those optimistic about an ongoing recovery in heavy machinery and those looking for a slowdown or double-dip.

The Quarter that Was 
Sales were a bit light in the July quarter, as the company missed the consensus guess by more than $200 million. Still, revenue did grow 18% and volume growth was responsible for the lion's share of it (up about 13%). The Ag and Turf businesses continue to perform reasonably well with 12% growth, while the Construction and Forestry business is bouncing back (up 59%) from a deep drop in the wake of the housing bubble. 

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