But despite the downside results and softer outlook for FY19, the stock has still jumped by above 5% at highs so far in today’s trading session. Today’s overall strength in the stock market certainly isn't hurting its cause, and, expectations weren't sky-high heading into the report, as the stock has struggled to gain any sustained momentum this year. In fact, DE is down about 8% on the year, even with today's gains. So, today’s response might also imply a case of results coming in better-than-feared, as both EPS and revenue showed solid year/year growth despite failing to appease expectations.
Taking a closer look at the Q4 results, DE reported EPS of $2.30, coming up short of the $2.45 consensus. This marked the third quarter in a row in which DE has missed analysts' EPS expectations on the bottom line. In the earnings press release, management commented that it continues to face cost pressures for raw materials, such as steel. However, the company is also addressing these cost increases with pricing actions and improved cost management.
Although it missed the consensus number, EPS did show strong year/year growth, up 46%. This was mainly attributable to the healthy growth in DE’s Construction and Forestry segment, which we elaborate on below.
On the top line, revenue increased by 18% to $8.34 bln, also below consensus, which anticipated revenues of $8.59 bln. Still, the high-teens revenue growth is pretty solid; farm machinery sales in the Americas continue to perform well. It is important to note, though, that, a good portion of the growth in the quarter was attributable to a major acquisition. Specifically, DE's acquisition of the road construction-oriented Wirtgen Group last December contributed 11% to the net sales growth for the quarter.
The acquisition had an especially profound impact on results in the company’s Construction and Forestry segment. Sales in that segment surged by 65% in Q4, with Wirtgen adding 45% for the quarter. Excluding Wirtgen, segment growth was primarily driven by higher shipment volumes and lower warranty expenses, partially offset by higher production costs.
Turning to its larger Agriculture and Turf segment, sales were up a modest 3% with operating profit decreasing by 4.5% to $567 mln. Results for the quarter were negatively affected by the aforementioned higher production costs, unfavorable effects of foreign-currency exchange, and higher research and development costs. Higher shipment volumes and price realization helped to partially offset these negative factors.
Lastly, in its earnings press release, DE also provided outlook for 2019. For the year, it anticipates that net revenue will grow by 7%, which would equate to revenues of approximately $35.68 bln, with net income of about $3.6 bln. Company equipment sales are also projected to increase by about 7%, including a full year of Wirtgen sales in 2019 versus 10 months in 2018. This will add about 2% to the company's sales in the year ahead.