Editor’s Note (2/19/2021): In a previous version of this article, Equipment Operations net sales were incorrectly reported as net sales and net sales. This has since been corrected.
Deere & Company (DE) is trading 6% higher after blowing away earnings estimates for the first quarter of 2021, earning $ 3.87 per share compared to expectations of $ 2.17. Revenue grew 19.4% year over year to $ 9.11 billion, well above the estimate of $ 7.12 billion. The strong positive reaction after the news has defied the odds as the previous return of 15% is on top of the extraordinary return of 55% in 2020. The stock is now just a stone’s throw away from the all-time high of $ 321.67 posted on Tuesday.
The central theses
- Deere significantly exceeded the top and bottom line estimates for the first quarter of 2021.
- The company is moving towards fully autonomous machines.
- The stock has posted historic gains since March 2020.
- Price action is challenging this week’s all time high.
The agricultural giant is benefiting from higher agricultural prices. The company is also moving towards fully autonomous tractors, combines, cotton pickers, sugar cane harvesters and loaders, as well as soil preparers, seed drills and plant care equipment, improving margins in a multi-billion dollar industry with few competitors. Investor apathy has disappeared since the stock hit a three-year low in March 2020, underpinning an uptrend that has made its most productive gains this century.
Wall Street consensus on Deere has deteriorated over the past year due to oversized price gains. The “Moderate Buy” rating is based on 12 “Buy” and 4 “Hold” recommendations. An analyst now recommends that shareholders close positions and step on the sidelines. Price targets Currently, they range from a low of $ 220 to a street high of $ 400, while the stock is set to open the session about $ 8 above the median of $ 310 on Friday.
Profit margin is one of the most used Profitability metrics to assess the extent to which a company or business activity makes money. It indicates what percentage of sales have been converted into profit. Simply put, the percentage is how many cents in profit the company made for every dollar sold.