Deere shares rise ahead of 3rd-quarter earnings report; analyst sees long-term growth
Shares of Deere & Co. climbed Tuesday, a day before the farm equipment maker reports its fiscal third-quarter earnings. An analyst said the company is well-positioned for long-term growth.
Deere, which also makes construction and forestry machines, has faced weaker demand for its products in recent months as the global recession prompts farmers and other customers to scale back spending on new equipment. Tight credit markets have made it more difficult for people in some countries to obtain loans to buy new tractors and other Deere products.
But "we believe that the company is likely to demonstrate continued solid execution in a challenging environment," Barclays Capital analyst Meredith Taylor wrote in a client note Monday. She has an "Overweight" rating and a $50 price target on the stock....MORE
A look at Deere & Co. ahead of earnings
Earnings season is winding down, but there is still some excitement left for earnings-confessional spectators. Up tomorrow ahead of the opening bell is Deere & Co. (NYSE: DE), manufacturer of agricultural machinery.
Analysts are expecting per-share results of 57 cents, which represents a drop of 57% from the $1.32 banked in the year-earlier period. Year-over-year quarterly revenue growth, however, has not endured quite as dramatic a fall, slipping 16.7%.
As far as surprising the Street goes, Deere does not have a great track record. Briefing.com indicates that in four of the past five reporting periods, the company has issued a negative earnings surprise. On the plus side, it did top expectations last quarter, earning $1.11 per share compared to analysts' expectations of $1.07.
Up 13% so far in 2009, DE shares are still down 35% in the past 52 weeks. During the past few months, the stock has run into technical resistance overhead in the 45 region. The shares are currently in this neighborhood, which could make things interesting if earnings results aren't what investors are expecting....MORE
Be Bullish for Deere Season
Sentiment is too negative ahead of the farm-machinery giant's earnings.
DEERE (TICKER: DE) OFFERS investors insights into the global agricultural markets. The options market offers insights into stocks.
Combine the two views and investors get an intriguing picture as Deere prepares to report fiscal third-quarter earnings Wednesday.
The put and call market is mostly negative on Deere. Professional traders spent most of last week accumulating bearish puts. Yet, one of Deere's peers, Caterpillar (CAT), recently reported second-quarters earnings that beat lowered expectations.Caterpillar's management raised full-year earnings guidance, which sparked a rally and heightened expectations that other companies in the sector, such as Deere, will surprise investors.
Investors have something to ponder. Will Deere pull a Caterpillar? Granted, the companies may be peers, but their businesses are different. CAT is more heavily weighted toward construction equipmment. Deere focuses on agriculture. However if Deere beats markedly negative expectations, the stock will pop higher and close some of the recent performance gap with Caterpillar. In the past three months, Deere's stock is up about 6%, compared to 29% for Caterpillar.
Aggressive traders should consider bullish bets on Deere. One trend that emerged during this current earnings season is that stock analyst earnings estimates have been too negative on the companies that they cover. Deere's earnings-per-share estimates range from 40 cents to 69 cents. The estimate trend is increasingly bearish. Three months ago the median EPS estimate was 93 cents -- now it's 57 cents....MORE