Deere down 15% despite strong results: ‘I like it for long-term’

  • May 20, 2022

Deere & Company (NYSE: DE) on Friday reported market-beating results for its fiscal second quarter. Shares are still down about 15%.

Notable figures in Deere Q2 earnings report

Net income printed at $2.10 billion that translates to $6.81 per share.
In Q2 last year, net income was capped at $1.79 billion or $5.68 a share.
Sales jumped 10.9% YoY to $13.37 billion, as per the earnings press release.

FactSet consensus was for $6.69 of EPS on $13.32 billion in sales.
Cost of sales was up 12.5%, contracting gross margin from 34.3% to 33.3%.

Sales from Production & Precision Agriculture, Small Agriculture & Turf, and Construction & Forestry went up 13%, 5.0%, and 9.0%, respectively. In the earnings press release, CEO John May said:

Looking ahead, we believe demand for farm equipment will continue benefitting from positive fundamentals in spite of availability concerns and inflationary pressures affecting our customers’ input costs.

Future outlook and Stephanie Link’s remarks

Deere & Co also raised its earnings outlook on Friday. The manufacturing company now forecasts $7.0 to $7.40 billion in earnings this year, including special items.

Commenting on the price action, Hightower’s Stephanie Link said the risk-off makes Deere very attractive for the long-term investor. On CNBC’s “Halftime Report”, she said:

The more Deere & Co falls, the numbers are going higher. Stock is now trading at 13.7 times forward. I like this for the long-term.

The stock has tanked nearly 30% in one month.

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