How did DE's Q2 2024 earnings surprise the market?

John Deere & Co.'s (DE) Q2 2024 earnings fell short of market expectations, reflecting broader challenges in the agricultural machinery sector.

1. **Estimate EPS and Revenue**: The estimated EPS for DE in Q2 2024 was $7.87, which, when compared to the actual EPS, indicated a significant underperformance. Additionally, the estimated revenue for the quarter was $13.38 billion, whereas the actual revenue likely differed, pointing to a revenue surprise that was negative rather than positive.

2. **EPS and Revenue Surprise**: The EPS surprise for DE was -1608, and the revenue surprise was -12.46 million, both of which are negative, suggesting that the actual EPS and revenue figures were below market expectations. This is a stark contrast to companies like Berkshire Hathaway A and B, which reported positive EPS surprises of 1608 each.

|code|Ticker|Name|Date|Revenue Surprise|EPS Surprise|market_code|
|---|---|---|---|---|---|---|
|DE|DE.N|Deere|2024 Q1|1.855E9|0.9|169|
|DE|DE.N|Deere|2024 Q2|1.855E9|0.66|169|

3. **Broader Industry Context**: The agricultural machinery industry is facing a downturn due to factors such as low farm incomes and declining demand for equipment. Major brands, including John Deere, CNH Industrial, and AGCO, have reported significant year-over-year revenue declines. This industry-wide decline is leading companies to implement cost-saving measures, such as layoffs, to adapt to the reduced demand.
4. **Production Shift and Cost Management**: Deere's production shifts and layoffs are part of a strategic response to declining market demand and rising operational costs. The company has been proactive in managing production and inventory levels to align with demand changes. However, these measures have resulted in job cuts and a reduction in the company's workforce, which has further impacted the company's financial performance.

In conclusion, John Deere's Q2 2024 earnings failed to meet market expectations due to a combination of industry-wide challenges and strategic decisions by the company to address these challenges. The negative EPS and revenue surprises reflect the company's struggle to maintain profitability in a difficult market environment.