|Bid||162.00 x 1200|
|Ask||166.46 x 800|
|Day's Range||165.63 - 166.58|
|52 Week Range||128.32 - 169.99|
|Beta (3Y Monthly)||1.20|
|PE Ratio (TTM)||16.17|
|Earnings Date||Aug 16, 2019|
|Forward Dividend & Yield||3.04 (1.83%)|
|1y Target Est||163.89|
The short answer: China, corn, and rain.After dropping 19% in the first two weeks of May, stock in Deere & Co. (DE) has been gaining on an unusual combination of factors. The resumption of trade talks between the US and China, a spike in the price of corn, and unseasonably poor weather in the rich farm belt of the Midwest have all come together and boosted a company that had been having trouble gaining traction. Deere is on an upward trajectory now, having gained 23% since May 17. The China FactorThis is the one that’s been getting all the headlines. The ongoing dispute between the US and China has seen both sides initiate protective tariffs and threaten more drastic actions, and global financial markets and trading networks have been feeling the pressure. That pressure has eased in recent days, however, as Presidents Trump and Xi have agreed to meet personally at the upcoming G20 summit.Both leaders are expressing optimism ahead of the meeting. President Trump has said, “I think we have a chance. I know that China wants to make a deal,” while Xi has added, “The key is to show consideration to each other’s legitimate concerns.” The upbeat talk from the Presidents has buoyed markets in recent sessions.In the last week Deere has gained from the happy talk on trade, but the stock’s run up began several weeks earlier. Shares in Deere have been on an upward trajectory since bottoming out on May 17. Here Comes the Rain AgainAnd now we get to corn and rain. The weather in the Midwest has been unusually cold this year. There are snow warnings in the Colorado Rockies, as low down as 9,000 feet, while heavy rains and cold snaps have delayed the planting season in the nation’s most productive farming regions. The delays have lowered forecasts for the 2019 harvests and tightened the worldwide crop supply. At the same time, demand remains high. The predictable result is higher agricultural prices.The most immediate gainer there is corn. Corn bottomed out on May 10 and has risen 31% since then to reach a five-year high. Wheat is also up, having gained 29% since May 10, although it has not reached record levels.Notice the dates – corn and wheat both started rising just seven days before the price of Deere’s stock started climbing. The rising prices assured farmers that they would not be financially ruined by the looming bad season, and they began making needed investments in equipment purchases and maintenance. Deere is a direct beneficiary of those investments, and the stock price reflects it.Josh Brown, CEO of Ritholtz Wealth Management, agrees that Deere is gaining more from corn than easing trade tensions. He points out, “If you take a look at the chart, Deere started to break out in the middle of May. It stopped trading on tariff headlines, started trading on corn prices which are now going up.” This Deere is RunningWall Street’s analysts have taken note – a 23% gain in a lagging industrial stock is sure-fire attention-getter. Writing from Baird on June 16, Mircea Dobre sums up the support for DE shares: “Corn has rallied sharply breaking out of a five-year range as persistent wetness has raised supply concerns. Prices seem poised to move higher; this helps farm economics which should drive equipment demand.” In line with his optimistic comment, Dobre upgraded DE shares to a ‘Buy’ rating.To go along with his upbeat outlook, he also raised his price target by 35%, to $175. That may turn out to be too low, however, as DE’s price has already run up to $166. Dobre’s target gives the stock a 4.8% potential upside.Five-star analyst Stephen Volkmann, of Jefferies, has also upgraded DE, moving the stock from ‘Hold’ to ‘Buy.’ He cites the tighter crop supplies in the global market and consequent higher prices in support of his upgrade, saying, “Positive momentum in farmer net income support double-digit large equipment growth through 2020.”Elaborating on the improved outlook for farmers, Volkmann said in a June 24 note, “We believe farm fundamentals are finally turning. A tightened global crop supply demand balance and positive momentum in farmer net income support double-digit large equipment growth through 2020.” Volkmann’s price target, $190, indicates room for a 14% upside.Overall, Deere has a ‘Moderate Buy’ rating from the analyst consensus, based on 9 buys, 3 holds, and 1 sell assigned in the past three months. These ratings still partially reflect the more downbeat outlook that prevailed in the early part of May; the higher price targets and ratings upgrades that are now starting to come in have not had time to fully reflect in the aggregate ratings. The same effect is visible in the price target. The average PT of $163 still includes lower values assigned in past weeks; since then, the stock has risen fast and now trades for $166. If current trends hold, expect the price target to adjust as analysts reevaluate the stock.View DE Price Target & Analyst Ratings Detail
On June 25, US Secretary of Agriculture Sonny Perdue told CNN in an interview that the US-China trade war has impacted US farmers. He said that farmers “are one of the casualties” of the trade war.
U.S. companies' borrowing to spend on capital investments rose 18% in May from a year earlier, the Equipment Leasing and Finance Association (ELFA) said. Companies signed up for $9.1 billion in new loans, leases and lines of credit last month, up from $7.7 billion a year earlier. "The continued low interest rate environment, coupled with solid fundamentals in the U.S. economy, provide incentive for U.S. businesses to expand and grow their operations," ELFA Chief Executive Officer Ralph Petta said.
Every sector of Georgia's economy that relies on imports from China will be affected by the potential new tariffs, according to the Georgia Association of Manufacturers
Farmer buying power will remain pressured for 2019, but this will change for the better next year and will help support Deere & Company (NYSE: DE ), according to Jefferies. The Analyst Jefferies' Stephen ...
The farm economy is accelerating while the rest of the market is decelerating. That means it’s time to own farming stocks, according to observers on Wall Street.
rose Monday after analysts at Jefferies upgraded the stock to buy from hold on improved sentiment about the current farm cycle and farmer net income. In trading Monday, Deere was trading at $165.48, up 0.73%. "Weather challenges in the U.S. and abroad coupled with increased demand look to fundamentally drive better balance in global crop and livestock markets, with higher prices for the next several years," analyst Stephen Volkmann wrote.
The Zacks Analyst Blog Highlights: Deere, Las Vegas Sands, Vertex, Tesla and Keurig Dr Pepper
U.S. stocks closed sharply higher on Tuesday after President Trump???s said he will meet his Chinese counterpart during the G-20 summit which boosted investors??? confidence.
Deere & Co NYSE:DEView full report here! Summary * Perception of the company's creditworthiness is neutral * ETFs holding this stock are seeing positive inflows * Bearish sentiment is low * Economic output in this company's sector is contracting Bearish sentimentShort interest | PositiveShort interest is low for DE with fewer than 5% of shares on loan. The last change in the short interest score occurred more than 1 month ago and implies that there has been little change in sentiment among investors who seek to profit from falling equity prices. Money flowETF/Index ownership | PositiveETF activity is positive. Over the last month, ETFs holding DE are favorable, with net inflows of $9.60 billion. Additionally, the rate of inflows is increasing. Economic sentimentPMI by IHS Markit | NegativeAccording to the latest IHS Markit Purchasing Managersâ€™ Index (PMI) data, output in the Industrialsis falling. The rate of decline is very significant relative to the trend shown over the past year, and is accelerating. The rate of contraction may ease in the coming months, however. Credit worthinessCredit default swap | NeutralThe current level displays a neutral indicator. DE credit default swap spreads are decreasing, indicating some improvement in the market's perception of the company's credit worthiness. Additionally, they are within the middle of the range set over the last three years.Please send all inquiries related to the report to firstname.lastname@example.org.Charts and report PDFs will only be available for 30 days after publishing.This document has been produced for information purposes only and is not to be relied upon or as construed as investment advice. To the fullest extent permitted by law, IHS Markit disclaims any responsibility or liability, whether in contract, tort (including, without limitation, negligence), equity or otherwise, for any loss or damage arising from any reliance on or the use of this material in any way. Please view the full legal disclaimer and methodology information on pages 2-3 of the full report.
The weather has turned for the worse and crop prices are up. That means it is time to invest in farming stocks, according to Wall Street.
By buying an index fund, investors can approximate the average market return. But many of us dare to dream of bigger...
were rising Monday following a bullish note from analysts at Baird who believe the macro agricultural environment will lead to higher demand for agricultural equipment. Deere was up 1.4% to $153.64 on Monday. "Corn prices and machinery demand are correlated, machinery volumes usually on a ~1 year lag vs. corn prices.
Deere (DE) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.
While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, increasing oil prices and optimism towards the resolution of the trade war with China, many smart money investors kept their cautious approach regarding the current bull run in the first quarter and hedging or reducing many of their […]
The Zacks Analyst Blog Highlights: Microsoft, Facebook, Bank of America, American Express and Deere
With solid equipment demand, focus on the Wirtgen acquisition and long-term opportunities, Deere (DE) is worth retaining in the portfolio at the moment.
Between 2016 and 2018, Caterpillar (NYSE:CAT) earnings more than tripled. Unsurprisingly, the stock price soared. Caterpillar stock started 2016 near $60; it started 2018 roughly one hundred points higher.Source: Anthony via FlickrThere were several factors at play in earnings growth. Easy comparisons helped, certainly. Revenue fell 18% year-over-year in 2016. That was the fourth straight year in which sales declined, a first for the company. Not even during the Great Depression did Caterpillar's top line stay negative for so long. Those four years of declines also led to a great deal of pent-up demand, which has benefited results over the last nine quarters.In addition, Caterpillar aggressively cut costs: its headcount shrunk by 20% between the end of 2013 and the end of 2017. Corporate tax reform boosted EPS. Almost everything has gone right of late - but that hardly seems reflected in Caterpillar shares.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Dark Horse Stocks Winning the Race in 2019 Indeed, over the last eighteen months, Caterpillar stock now has declined over 20%. Yet earnings still are expected to grow, if at a slower rate. Caterpillar is guiding for adjusted EPS this year (excluding a one-time tax benefit) of $11.75-$12.75, 5-14% above 2018 levels. Investors don't seem to care: the CAT stock price touched a 2019 low just week, and now sits at a little over 10x the midpoint of that guidance range.The issue is that investors aren't looking at 2019, or 2016. They're looking at 2020 and beyond. To some investors, that might present an opportunity. To others, it explains why the CAT stock price continues to fall and may have further to go. The Cyclical CATAlong with John Deere (NYSE:DE), Caterpillar is one of the most widely-held cyclical stocks. That's been particularly true this decade. Back in 2012, the company generated nearly $66 billion in revenue. That year, the so-called commodity supercycle driven in part by Chinese growth peaked, and Caterpillar sold billions of dollars of equipment to miners worldwide. Commodity prices collapsed, demand dried up, and the overhang of barely used equipment pressured sales for years.Indeed, Caterpillar's Resource Industries segment saw revenue drop by over 70 percent between 2012 and 2016. Operating profit went from over $4 billion to a loss of $1 billion. That business now has recovered - but a $1.6 billion profit in 2018 obviously sits well below early-decade peaks.That volatility explains, at least in part, why Caterpillar stock looks so cheap at the moment. Investors always know Caterpillar is a cyclical play, but the roller-coaster ride of this decade remains fresh in their memories. In theory, a cyclical stock should see its earnings multiple expand at the bottom as was the case in 2016 when savvy investors started buying CAT stock ahead of its rebound.Of course, that also means multiples should contract at the top, and it's the fear that we indeed are at, or near, the top that explains why the CAT stock price sits at barely 10x 2019 earnings per share. The Cycle Weighs on Caterpillar StockTo be sure, there are some company-specific factors as well. Caterpillar cited a $70 million direct impact from tariffs just in the first quarter, and trade war fears no doubt have weighed on CAT. Like other American firms including Deere, 3M (NYSE:MMM), and even Apple (NASDAQ:AAPL), the company also cited market share struggles in the Chinese market.But China only accounts for roughly 10% of Caterpillar revenue. Potential market share issues in one region don't offset the fact that Caterpillar earnings have soared - or that the company seems to be performing exceedingly well everywhere else.CAT's cheap multiple is a function primarily of cyclical worries. To be sure, it's not alone. Banks like Bank of America (NYSE:BAC) and JPMorgan Chase (NYSE:JPM) look cheap. Homebuilders Lennar (NYSE:LEN) and D.R. Horton (NYSE:DHI), too, trade at single-digit multiples, even after solid YTD rallies.Investors in these stocks, and in Caterpillar, are looking to ahead to looming trouble. That might be a trade war. It might just be the natural end of a U.S. economic expansion heading into its eleventh year. Caterpillar is a more global play. Over half of its sales come from outside North America, but the logic is the same. A slowdown is coming and investors don't want to own the stocks most likely to be affected. The Bet on CAT StockAnd so investors aren't really focused on 2019 results and they're not going to be. An extra dime or two in 2019 EPS doesn't matter much, if at all, if those earnings start declining in 2020 anyhow. UBS (NYSE:UBS) made that case last week, cutting its CAT stock price target to $115 while projecting a decrease in earnings next year.That's the problem for Caterpillar stock right now: there's not much Caterpillar can really do. It's cut costs so significantly of late that there's probably less room to react if sales do start turning negative. What growth it does muster in 2019 could well be overshadowed, or ignored, amid fears of what comes next. Moreso than other cyclicals, CAT is going to be held hostage to the broader sentiment toward the global economy.Of course, that's precisely what makes CAT so interesting, particularly near YTD lows. There is a nice case here for the stock. As Dana Blankenhorn pointed out last month, CAT is an attractive pick for income investors. The dividend already yields 3.3%, and Caterpillar management has promised further hikes going forward.Those hikes are presumably dependent on some degree of cooperation from the broader economy, but at least for now the dividend is well-covered.But even a 4% dividend isn't quite enough to turn bullish. An investor has to trust the global economy to go long CAT, even at these levels. And if an investor does see global macro worries as overdone, there are few better plays than Caterpillar stock.Another leg up in the global economy and particularly in demand for commodities like minerals, oil and natural gas would allow earnings to keep growing. CAT's earnings multiple likely would expand as well thanks to increased investor confidence. It's not unreasonable in that scenario to see Caterpillar stock clearing $200, something like 14-15x adjusted EPS of $14-$15. For what it's worth, the high Wall Street target price is exactly $200.It's not quite that simple but it's close. CAT is a bet on the global economy being better than feared. It's not a bet I'm quite willing to take but I can see why other investors might.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * 7 Dark Horse Stocks Winning the Race in 2019 * 6 Chinese Stocks to Sell That Are Suffering From a Digital Ad Slowdown * 4 Technology Stocks Blasting Higher Compare Brokers The post As Solid as It Is, Looming Fears Will Hold Back Caterpillar Stock appeared first on InvestorPlace.