The market has been tough on companies that didn’t quite meet expectations this earnings season, and Friday provided further examples. It’s not necessarily that firms aren’t doing well, but the bar has been raised and if you’re a company that doesn’t climb over that bar, you’re likely to get punched.
Deere & Company (NYSE: DE) on Friday became the latest big name to run into that particular buzz saw, missing Wall Street analysts’ average projection for earnings per share with a tally of $3.14 and seeing its shares fall in pre-market futures trading before jumping higher once the market actually opened. Analysts had expected $3.33, according to third-party consensus estimates. In a way, however, DE was a victim of high expectations, because its earnings were up a lot year-over-year but down vs. the Street’s consensus.
DE said in its release that the company is experiencing higher raw material and freight costs. This could point to the impact of rising energy prices on big industrial firms, and is something to keep in mind when the next earnings season rolls around in July. What DE didn’t say also stood out after its competitor Caterpillar Inc. (NYSE: CAT) earlier this earnings season said the Q1 represented a “high water mark.” DE didn’t repeat that sort of language in its release, and had a lot of nice things to say about a quarter that saw equipment net sales rise 34 percent based on what DE called “strength in key markets.”
DE was the second company to disappoint the Street since yesterday’s closing bell. Retailer Nordstrom, Inc. (NYSE: JWN) beat Wall Street analysts’ earnings per share estimates and raised guidance, but missed on same-store sales. That key metric barely rose (up 0.2 percent), and shares of JWN tumbled more than 6 percent in pre-market