Deere & Co.
Deere & Co.
DE
$3.69
0.97%
25%
IBD Stock Analysis
- After a long consolidation, Deere has formed a handle with a 386.65 buy point.
Industry Group Ranking
Emerging Pattern
Cup with Handle
* Not real-time data. All data shown was captured at
12:36PM EST on
01/14/2022.
Farm machinery maker Deere & Co. (DE) is Friday’s IBD Stock Of The Day, as it recently unveiled its autonomous tractor at CES. Deere stock nears a buy point.
X
Deere’s fully autonomous tractor uses hybrid technologies including cameras, GPS and various AI programs. The goal is to give farmers the ability to put the tractor to work and go do something else, whether it’s other farm tasks, time with family or even working off the farm, said D.A. Davidson analyst Michael Shlisky in a Jan. 7 note to clients.
“Overall, we viewed the event as a positive for DE, as it has the potential to offer significant SaaS/recurring-revenue opportunities that could offset some of the potential impact of long-term Ag trends away from grains,” Shlisky wrote.
On the other hand, inflation in the costs of labor, land, chemicals, or other inputs could curb farmers’ ability to spend on equipment, such as Deere machinery. Higher interest rates, which the Fed seems poised to implement, also will make it more expensive for farmers or other key end-users to purchase Deere equipment.
If interest rates do rise, Deere’s “sales and earnings could fall short of expectations,” Shlisky wrote. “In addition, higher rates could lead to more past-due or defaulted equipment loans for DE.”
Deere Earnings
Meanwhile, Deere has posted five straight quarters of earnings growth, four of them triple-digit gains. The Moline, Ill.-based company also reported four quarters in a row of revenue increases.
Looking ahead, FactSet analysts expect earnings to tumble 41.8% year over year to $2.25 a share, while revenue edges up 1.8% to around $8.2 billion. Deere reports its fiscal first quarter earnings on Feb. 18.
Deere Stock
Shares slipped 1.2% Friday to 375.72 on the stock market today. Deere stock has been consolidating for several months. It recently rebounded back above its 50- and 200-day moving averages with high volume, according to MarketSmith chart analysis. Deere stock has now formed a handle with a 386.65 buy point.
Its relative strength line spiked up as shares rebounded from key support, but it’s still well off highs. Its RS Rating is 84 out of a best-possible 99, while its EPS Rating is 97.
Rival Caterpillar (CAT) stock rose 0.3% to 227.76 on Friday. It’s showing similar action, though it has not formed a handle. It has a cup-base buy point of 246.79.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
YOU MAY ALSO LIKE:
Why This IBD Tool Simplifies The Search For Top Stocks
Want To Get Quick Profits And Avoid Big Losses? Try SwingTrader
Read More: Deere Stock Plows Ahead Towards Buy Point