Deere hiked 2023 profit outlook Friday on robust demand for farm and construction equipment, after more than doubling quarterly earnings. DE stock jumped, offering an early entry and working toward a traditional buy point.
Deere Earnings Beat-And-Raise
An industrial bellwether, Deere has shrugged off recession and inflation fears to deliver solid profits. In the last year, higher commodity prices let farmers buy both new and upgraded machines.
In the fiscal first quarter ended Jan. 29, the tractor maker posted a 124% EPS jump on a 32.2% total revenue surge, both topping estimates. Earnings growth accelerated for a second straight quarter.
"Overall, the quarter "demonstrated Deere's ability to produce and drive positive pricing for its technology-driven products," William Blair analyst Lawrence De Maria wrote in a Feb. 17 note.
Deere CEO John May said a better operating environment is leading to higher levels of production.
In addition, Deere's 2023 guidance for net income was well above consensus estimates of $8.31 billion.
DE Stock
Shares jumped 7.5% to 433.31 on the stock market today in heavy volume. DE stock surged above the 50-day moving average, retaking that level for the first time since Jan. 18.
While investors could start a position here, they might want to wait. Deere stock is working back up the right side of a flat base with a 448.50 buy point. The flat base formed next to a much-deeper consolidation.
The flat base started after Deere stock gapped up on fiscal Q4 earnings.
Inflation, Supply Chain
The farm giant faced a tough 2022 due to supply issues and rising inflation. Yet Deere earnings stayed solid, backed by demand for its iconic green tractors.
On Friday, Deere gave a far better-than-expected 2023 outlook. CEO John May cited solid fundamentals and low stockpiles.
China's reopening after the pandemic is another likely driver for DE stock.
