Deere & Co (also known as John Deere) is one of the largest manufacturers of agricultural, construction, forestry, and landscaping equipment in the world. The company's diverse portfolio provides customers with a full line of innovative solutions including after-sales services and financing.
Better-than-expected results in 1Q23 were driven by robust pricing and higher sales volumes amid solid farm fundamentals and strong order growth. This was complemented by easing cost pressures and improved manufacturing efficiencies. Top- and bottom-line growth over the next six months is expected to remain strong.
Technically speaking, the stock price is forming a bullish megaphone pattern (see the black diverging trendlines on both the main chart and the insert), consisting of two rising peaks and two falling troughs that are generated by volatile trading. Typically, when this pattern occurs over extended periods of time, prices trend higher.
Volume, which in this case has peaked in line with price, plays an important role in recognising the megaphone pattern (see the lower panel on the chart). The increase in the volume serves as confirmation of upside bias.
Share Information
|
Share code |
DE |
|
Industry |
Capital Goods |
|
Market capatalisation (USD) |
125.95 billion |
|
One year total return |
25.55% |
|
Return year-to-date |
-0.87% |
|
Current price(USD) |
425.05 |
|
52 weeek high(USD) |
448.40 |
|
52 week low(USD) |
283.81 |
|
Financial year end |
October |
|
Closing paragraph |
The stock is trading above its 200-day simple moving average of ~$374.50. Expect moderate volatility going forward. |
Consensus expectations
(Bloomberg)
| Share code | FY22 | FY23E | FY24E | FY25E |
|---|---|---|---|---|
Headline Earnings per Share (USD) |
23.28 |
29.80 |
31.32 |
31.27 |
Growth (%) |
- |
28.00 |
5.10 |
-0.17 |
Dividend Per Share (USD) |
4.36 |
4.81 |
5.09 |
5.41 |
Growth(%) |
- |
10.30 |
5.80 |
6.25 |
Forward PE (times) |
- |
14.26 |
13.57 |
13.59 |
Forward Dividend Yield (%) |
- |
1.13 |
1.20 |
1.27 |
Closing paragraph |
The market expects strong earnings growth over the next year due to pent-up replacement demand, with many customers expected to restock their inventories and refresh their equipment cycles. This will, however, normalise in FY24 with growth expected to moderate thereafter. |
|||
Buy or Sell Rationale
Technical Analysis :
Fundamental view:
| Share Name and position |
EXR - BUY (Continue to hold) |
TAP - BUY (Continue to hold) |
LHX - BUY (Continue to hold) |
|---|---|---|---|
Entry |
157.83 |
53.65 |
212.87 |
Current |
180.00 |
53.50 |
209.55 |
Movement |
0.5% |
-0.3% |
-1.6% |
Summary text |
A price retracting from the lower range of the linear regression channel remains attractive. Upside price momentum supports the bullish trend.
|
A symmetrical triangle pattern in a previous uptrend remains of interest. Testing its 23.6% Fibonacci retracement level and remains just above its 200-day simple moving average.
|
An inclining channel pattern remains of interest, though upside price momentum has halted, which is a concern for the bullish trend.
|
| Share Name and position |
AAPL - BUY (Continue to hold) |
KEY - BUY (Continue to hold) |
PBD - BUY (Continue to hold) |
|---|---|---|---|
Entry |
153.71 |
18.73 |
20.47 |
Current |
149.4 |
18.13 |
19.73 |
Movement |
-2.8% |
-3.2% |
-3.6% |
Summary text |
A retraction from the lower range of a linear regression channel pattern remains of interest. Trading just above its 50% Fibonacci retracement level and is testing its 200-day simple moving average.
|
An incomplete rising wedge pattern and remains of interest. Testing its 61.8% Fibonacci retracement level.
|
An incomplete falling wedge pattern remains of interest. The price is testing its 200-day simple moving average.
|
