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6 Reasons to Add Deere (DE) Stock to Your Portfolio Now

Zacks Equity Research

Shares of Deere & Company DE, producer of agricultural equipment and a leading manufacturer of construction, forestry, and commercial and consumer equipment, have been performing well of late.

If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead. This Zacks Rank #1 (Strong Buy) stock has an estimated long-term earnings growth rate of 7.58%.

Estimates Northbound

Estimates for Deere have moved up over the past 30 days, reflecting the optimistic outlook of analysts. The earnings estimate for third-quarter fiscal 2017, fiscal 2017 and 2018 have all gone up in the last 30 days.

For the fiscal third quarter, the Zacks Consensus Estimate for earnings has gone up 24% over the past 30 days and is pegged at $1.83, indicating year-over-year growth of 18%. The estimate for fiscal 2017 climbed 29% to $6.21. The Zacks Consensus Estimate for fiscal 2018 also moved north 20% to $7.27.

Positive Earnings Surprise History

Deere outpaced the Zacks Consensus Estimate over the trailing four quarters, generating an encouraging positive average earnings surprise of 70.41%.

Ahead of the Industry

The company has outperformed the Zacks categorized Machinery-Farm sub-industry in the past one year. Shares have gained 52.5%, while the industry recorded growth of 46%.



Upbeat Q2

Deere reported record second-quarter fiscal 2017 adjusted earnings per share of $2.49, surging around 59.6% year over year. Earnings also outpaced the Zacks Consensus Estimate of $1.70, registering a positive earnings surprise of 46.5%.

Raised Guidance

Given the upbeat fiscal second-quarter performance, Deere raised its equipment sales growth forecast to about 9% year over year for fiscal 2017 from the prior view of 4%. The company projects equipment sales to rise about 18% in the fiscal third quarter compared with the year-ago period. For fiscal 2017, Deere also boosted its outlook for net sales to climb 9% year over year and net income at $2.0 billion.

Growth Drivers

Deere is anticipated to gain from a durable business model and wide range of revenue sources. Its execution of operating plans, disciplined cost management and a broad product portfolio also remain tailwinds.

In addition, Deere remains well placed for growth over the long term, based on steady investments in new products and geographies. Profitability will remain strong, backed by increased global demand for food, shelter and infrastructure.

Other Stocks to Consider

Other top-ranked stocks in the same space include AGCO Corp. AGCO, Altra Industrial Motion Corp. AIMC and Applied Industrial Technologies, Inc. AIT. All three stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO has a remarkable average positive earnings surprise of 40.39% for the last four quarters. Altra Industrial Motion generated an average positive earnings surprise of 15.93% over the trailing four quarters. Applied Industrial Technologies has delivered an average positive earnings surprise of 9.78% in the past four quarters.

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