Deere stock is having an excellent year so far in 2020. Investors will get a look into 2021 when the company reports earnings on Nov. 25.
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Deere stock is having an excellent year so far in 2020. Shares of the maker of heavy machinery are up about 48% year to date. Investors will get a look into 2021 when the company reports earnings next week, on Nov. 25.
It’s Deere’s (ticker: DE) fiscal-fourth-quarter report. Farming is seasonal and the company’s fiscal year corresponds with the harvest. They are wrapping up their year just before America sits down to Thanksgiving dinner.
Here’s what to expect when Deere (ticker: DE) reports, along with some recent history:
•Wall Street expects the company to report $1.49 in earinigs per share on $7.7 billion in sales. In the year-ago quarter, Deere earned $2.14 a share from $8.7 billion in sales. Sales and earnings are both expected to drop in 2020 compared with the year-ago quarter.
•But things are looking better lately. Earnings estimate have gone up roughly 30 cents a share after fiscal third quarter earnings were reported in August. Deere blew away expectations, reporting $2.57 in per-share earnings. Analysts projected $1.24 a share. Deere stock gained 4.4% on the report.
•Deere shares are up 34% over the over the past three months, far better than the roughly 6% gains of both the Dow Jones Industrial Average and S&P 500.
•For the coming report, options markets imply a post-earnings stock move of about 4% to 5%. The average move after earnings over the past four quarters has been right around 4%.
•Deere management hosts an earnings conference call on Nov. 25 at 10 a.m. Eastern Time. Investors will be interested in current results as well as the outlook for the coming year.
•In November 2019, Deere guided to about $2.9 billion in net income. The company, amid pandemic, should end up reporting about $2.4 billion. For fiscal 2021, Wall Street expects Deere to earn about $3.4 billion.
•Baird analyst Mig Dobre raised his price target to $281 from $250 Thursday evening. He rates Deere stock at Buy. His is increasingly bullish on 2021 because of better farming and construction fundamentals pointing out peers ” AGCO (AGCO) and CNH Industrial (CNHI) have both recently reported strong order books with growth across product categories and regions.”
•Bernstein analyst Chad Dillard is positive about 2021 guidance as well. He expects Deere to guide to about $3.7 billion in net income, a little better than the consensus number. The coming year “will mark a recovery year for ag equipment,” writes Dillard in a Friday research report. He raised his Deere target price to $274 from $244, but rates Deere stock at Hold.
•J.P. Morgan analyst Ann Duignan also expects a solid guide. She, however, rates Deere stock at Sell calling valuation “stretched.” Deere trades at about 20 times estimated 2021 earnings, in line with the price/earnings ratio of the S&P 500, but a 30% premium to Deere’s recent trading history. Duignan’s target is $210 a share, which works out to about 19 times her estimated 2021 EPS of $10.80.
Overall, Wall Street likes Deere stock. Two-thirds of analysts covering the company rate shares at Buy. The average Buy-rating ratio for stocks in the Dow is about 58%.
Still, with the stock up, the company will have to deliver solid guidance to avoided disappointing high investor expectations.
Write to Al Root at [email protected]
