John Deere Stock Sees Green As Its Stock Builds A Base, Profit Estimates Rise

Deere (DE) is like the Tesla (TSLA) of the farm equipment industry, but with slow growth and without the volatility. This Big Cap 20 stock is building a cup base with a 393.03 buy point and is a stock to watch.

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John Deere has for more than 40 years used the advertising catchphrase “Nothing runs like a Deere.” It’s not clear whether Deere was referring to its farm machines or John Deere stock. Nonetheless, Deere seems content with the way its stock just ambles along.

The iconic agriculture equipment maker’s stock is forming a cup base, according to MarketSmith chart analysis. Friday the stock jumped 4.8%, well above its 50-day moving average and 200-day line.

And in the past few days, the Relative Strength (RS) Rating for Deere stock climbed into a new percentile, rising to 90. Market research shows that top-performing stocks typically have an 80 or better RS Rating as they begin their biggest price moves.

Deere is the second-rated company in its farm machinery industry group, behind top-ranked irrigation company Lindsay (LNN), according to IBD Stock Checkup. The group as a whole is ranked No. 60 out of 197 industry groups, moving up from 90 a week ago and 133 four weeks ago.

John Deere Profit Estimates Rise

Deere has a strong 97 Composite Rating. And it has a high B rating in Accumulation/Distribution, which tracks the relative degree of institutional buying vs. selling.

The Moline, Ill.-based company has in the past year reported uneven profit and sales growth.

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Earnings grew 16% in the most recent quarter to $6.16 per share. That came on 22% higher revenue, to $14.1 billion. The prior three stanzas Deere reported 72% higher EPS, a 25% year-over-year drop, then a 20% increase. Sales growth has been a bit more consistent, coming in at 16%, 5% and then 11% before last quarter’s 22% hop.

Deere is scheduled to announce its fiscal 2022 fourth quarter results on Nov. 23. FactSet’s consensus estimate is for earning of $7.12 a share on sales of $13.46 billion.

Analysts expect Deere’s earnings to jump 14% next year to $26.08 a share from 2022’s earnings forecast of $22.85 a share.

The most recent analyst report was from Deutsche Bank, which maintained its hold rating on the stock but cut its price target to 365 a share from 389.

Deere gains when infrastructure stocks gain. Deere’s earth-moving equipment and other segments, where it competes with Caterpillar (CAT) and others, provided 43% of 2021 sales, while total agriculture accounted for the rest.

Follow Michael Molinski on Twitter @IMmolinski

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