CHICAGO — Agricultural equipment maker Deere & Co. this week reported a 52 percent increase in fourth-quarter earnings on surging demand for tractors and combines worldwide, walloping Wall Street's expectations.

Deere said Wednesday the strong agricultural sales enabled it to overcome declines in other sectors because of the U.S. housing slump. The Moline, Ill.-based company also makes construction and forestry equipment such as backhoes, excavators, riding mowers and leaf blowers.

Higher grain prices and rising farm income fueled heavy spending by farmers in the quarter, sending sales of ag equipment up 35 percent over a year ago. Increased ethanol production also contributed to the spike.

The world's largest manufacturer of agricultural machinery, which is known for conservative estimates, said it expects farm sales to continue at a double-digit pace in 2008.

That forecast plus the better-than-expected results pushed its shares up $4.80, or 3.3 percent, to $149.80 in afternoon trading — double the level of just 15 months ago.

"Sharp increases in crop prices amid surging demand for ethanol appear to support expectations for stronger U.S. crop receipts, farm cash income, and machinery demand in 2008," Morningstar analyst John Kearney said in a research note.

Earnings for the August-through-October period climbed to $422.1 million, or $1.88 per share, from $277.3 million, or $1.20 per share, in the previous year. That easily exceeded the $1.55-per-share consensus estimate of analysts surveyed by Thomson Financial. The company said its earnings per share results do not reflect a recently approved 2-for-1 stock split.

Revenue grew to $6.14 billion from $5.12 billion, better than the $5.8 billion expected by analysts.