Deere & Company (DE) Is a Trending Stock: Facts to Know Before Betting on It

Deere & Company (DE) has been trending on Zacks.com, with shares up 2% over the past month versus a 0.6% gain for the S&P 500, despite its industry declining 1.8%. Current fiscal year earnings are projected to decline 26.5% year-over-year to $18.82 per share, with revenue also expected to decrease 15%; however, estimates point to a rebound in the next fiscal year, with earnings projected to grow 17.1% and revenue up 7.3%. Deere currently holds a Zacks Rank #3 (Hold), suggesting near-term performance in line with the broader market, and its valuation metrics indicate it is trading at a premium compared to its peers.

Analysis

Deere & Company (DE) has recently exhibited stock price strength, returning +2% over the past month, outperforming both the Zacks S&P 500 composite's +0.6% change and its own Zacks Manufacturing - Farm Equipment industry, which declined by 1.8% during the same period. Despite this market outperformance, the company faces significant near-term headwinds. Current quarter earnings are projected at $4.60 per share, a 26.9% year-over-year decrease, with the Zacks Consensus Estimate for this period revised downwards by 1.4% in the last 30 days. For the current fiscal year, earnings are expected to be $18.82 per share, representing a 26.5% decline from the previous year, an estimate that has remained stable over the past month. Revenue forecasts follow a similar trajectory, with an anticipated 10.3% year-over-year drop to $10.21 billion for the current quarter and a 15% decrease to $38.05 billion for the current fiscal year. However, a recovery is forecasted for the next fiscal year, with consensus earnings estimated at $22.04 per share (a 17.1% increase from the current year's projection) and revenues projected to grow by 7.3% to $40.83 billion, although this future EPS estimate saw a marginal -0.2% revision in the past month. In its last reported quarter, Deere posted revenues of $11.17 billion (-17.9% YoY) and EPS of $6.64, surpassing consensus estimates by +4.89% and +16.9% respectively, and has a track record of beating EPS estimates in the trailing four quarters. The company currently holds a Zacks Rank #3 (Hold), suggesting its performance may align with the broader market in the near term, and its valuation is considered premium relative to peers, evidenced by a Zacks Value Style Score of D.

Key Decisions for Investors

• Investors should acknowledge the significant projected declines in Deere's earnings and revenue for the current fiscal year, coupled with its premium valuation, which may warrant a cautious stance in the short term.
• The anticipated earnings growth of 17.1% and revenue growth of 7.3% for the next fiscal year present a potential positive catalyst, but the slight downward revision to next year's EPS estimate and the current year's challenges suggest monitoring for further confirmation of this recovery.
• Considering the Zacks Rank #3 (Hold) and the mixed picture of recent share outperformance against fundamental weaknesses, maintaining current positions or adopting a neutral outlook while closely observing upcoming earnings releases and shifts in analyst sentiment could be prudent.