Deere & Company DE shares have surged roughly 20% in the last six months to crush its industry’s 1% average climb and Caterpillar CAT and nearly match Boeing’s BA impressive run. The question now is can this manufacturing and farm equipment power’s recent success continue with it set to report earnings before the opening bell Friday?
Deere and fellow industrial giants still face uncertainty regarding the future despite reports of increased trade talks between the U.S. and China. The company is also coming off a significant bottom-line miss in Q4 fiscal 2018. Deere fell short of adjusted revenue estimates as well, but did see its top-line jump 17% to $9.42 billion, driven by gains from its purchase of German construction firm, The Wirtgen Group.
Despite the relatively disappointing quarter, shares of Deere have climb over the last six months. With that said, Bank of America downgraded DE to “neutral” recently, citing its significant gains, among other reasons. We can also see that DE and CAT stock have tracked one another pretty closely historically, which means Deere could be set to drop back down.
Outlook & Earnings Trends
Moving on, our current Zacks Consensus Estimate calls for Deere’s first-quarter fiscal 2019 revenues to surge 14.05% to reach $6.81 billion. Looking a bit further down the road, the company is expected to post full-year revenues of $35.67 billion, which would represent a nearly 7% climb above 2018.
At the bottom end of the income statement, DE’s adjusted quarterly earnings are projected to soar 37.4% to reach $1.80 per share. Meanwhile, the company’s fiscal 2019 earnings are expected to jump 21.5%.
Investors should also note that Deere’s Q1 EPS projection has climbed by $0.05 a share over the duration of the quarter, which means that analysts’ earnings sentiment turned more bullish. At the same time, however, the firm’s current full-year earnings outlook has fallen by $0.11.
Deere is currently a Zacks Rank #2 (Buy) based on its Q1 and fiscal 2020 earnings revision activity. The company also sports a “B” grade for Value in our Style Scores system. With all that said, Deere stock has been riding high recently, which will likely make it harder to impress investors Friday.
Deere is scheduled to report its Q1 fiscal 2019 financial results before the opening bell on Friday, 15 February. Make sure to come back to Zacks for a full breakdown of the company’s actual metrics.
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