We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Deere (DE) Up 34% So Far This Year: What's Driving the Stock?
Read MoreHide Full Article
Deere & Company’s (DE - Free Report) shares have been gaining on the back of improved performances in the first two quarters of fiscal 2021 and its upbeat outlook for full-year fiscal 2021. Further, solid fundamentals in the farm sector on the back of higher agricultural commodity prices, as well as improving demand in the construction sector, have been favoring the company’s price performance.
Notably, the company’s shares have gained 34.3% year to date, outperforming the industry’s rise of 30.8%. The stock also topped the S&P 500’s 12.6% rise over the same period.
Let’s delve deeper and analyze the factors that are driving this Zacks Rank #2 (Buy) stock’s price performance.
Image Source: Zacks Investment Research
What’s Working in Deere’s Favor?
Deere reported a whopping 169% improvement in earnings in second-quarter fiscal 2021, which followed growth of 137% in the first quarter. It also beat the Zacks Consensus Estimate in both quarters. This stellar performance was attributed to improving conditions in both the farm and construction sectors.
Improving farm income, driven by recovering agricultural commodity prices, has led farmers to resume investing in new equipment and replacing their aging fleets. Global stocks of grain have tightened significantly this year due to multiple factors, such as increased Chinese grain imports and recovery in ethanol usage, and weather-related production losses in South America. Deere expects grain and oilseed consumption to outstrip supply this year. Principal crop cash receipts in the United States are expected to increase 30% this year. U.S customer sentiment has improved over the last few quarters with elevated exports to China. Given the positive environmental backdrop, Deere has witnessed robust order activity, which poises it well for an improved performance in this fiscal and the next.
Deere raised its net income guidance for fiscal 2021 to a range of $5.3 billion to $5.7 billion. The mid-point of the new range suggests year-over-year improvement of 100%.
The company expects industry sales of large agricultural equipment in the United States and Canada to be up roughly 25% for fiscal 2021, and small agricultural and turf equipment to be up roughly 10%. In Europe, the industry is expected to be up around 10%, and in South America, industry sales of tractors and combines are likely to go up 20%.
Deere has also been witnessing improvement in the Construction & Forestry segment. Backed by strength in the housing market as well in non-residential sector, Deere expects North American construction equipment industry sales to be up between 15% and 20%, while sales of compact construction equipment are expected to be up between 20% and 25%. In forestry, the company expects the industry to be up between 15% and 20% as lumber demand remains robust, particularly in North America.
Deere is assessing its cost structure by reviewing organizational efficiency and footprint assessment, which in turn will help improve margins. The company can benefit from concerted focus on launching products with advanced technologies and features, as well as investments in precision agriculture.
Earnings estimates for Deere have also been going up over the past two months. The Zacks Consensus Estimate for fiscal 2021 has increased around 11%. The consensus estimate for the third quarter of fiscal 2021 has also been revised 8% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Tennant Company has an expected earnings growth rate of 49.5% for the current fiscal year. The company’s shares have gained around 18% year to date.
Encore Wire has an estimated earnings growth rate of 49.5% for the current fiscal year. Year to date, the company’s shares have rallied nearly 36%.
Arconic has a projected earnings growth rate of 447% for the current fiscal year. The stock has appreciated around 21% so far this year.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%.
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential. Today, Download Marijuana Moneymakers FREE >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Deere (DE) Up 34% So Far This Year: What's Driving the Stock?
Deere & Company’s (DE - Free Report) shares have been gaining on the back of improved performances in the first two quarters of fiscal 2021 and its upbeat outlook for full-year fiscal 2021. Further, solid fundamentals in the farm sector on the back of higher agricultural commodity prices, as well as improving demand in the construction sector, have been favoring the company’s price performance.
Notably, the company’s shares have gained 34.3% year to date, outperforming the industry’s rise of 30.8%. The stock also topped the S&P 500’s 12.6% rise over the same period.
Let’s delve deeper and analyze the factors that are driving this Zacks Rank #2 (Buy) stock’s price performance.
What’s Working in Deere’s Favor?
Deere reported a whopping 169% improvement in earnings in second-quarter fiscal 2021, which followed growth of 137% in the first quarter. It also beat the Zacks Consensus Estimate in both quarters. This stellar performance was attributed to improving conditions in both the farm and construction sectors.
Improving farm income, driven by recovering agricultural commodity prices, has led farmers to resume investing in new equipment and replacing their aging fleets. Global stocks of grain have tightened significantly this year due to multiple factors, such as increased Chinese grain imports and recovery in ethanol usage, and weather-related production losses in South America. Deere expects grain and oilseed consumption to outstrip supply this year. Principal crop cash receipts in the United States are expected to increase 30% this year. U.S customer sentiment has improved over the last few quarters with elevated exports to China. Given the positive environmental backdrop, Deere has witnessed robust order activity, which poises it well for an improved performance in this fiscal and the next.
Deere raised its net income guidance for fiscal 2021 to a range of $5.3 billion to $5.7 billion. The mid-point of the new range suggests year-over-year improvement of 100%.
The company expects industry sales of large agricultural equipment in the United States and Canada to be up roughly 25% for fiscal 2021, and small agricultural and turf equipment to be up roughly 10%. In Europe, the industry is expected to be up around 10%, and in South America, industry sales of tractors and combines are likely to go up 20%.
Deere has also been witnessing improvement in the Construction & Forestry segment. Backed by strength in the housing market as well in non-residential sector, Deere expects North American construction equipment industry sales to be up between 15% and 20%, while sales of compact construction equipment are expected to be up between 20% and 25%. In forestry, the company expects the industry to be up between 15% and 20% as lumber demand remains robust, particularly in North America.
Deere is assessing its cost structure by reviewing organizational efficiency and footprint assessment, which in turn will help improve margins. The company can benefit from concerted focus on launching products with advanced technologies and features, as well as investments in precision agriculture.
Earnings estimates for Deere have also been going up over the past two months. The Zacks Consensus Estimate for fiscal 2021 has increased around 11%. The consensus estimate for the third quarter of fiscal 2021 has also been revised 8% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Zacks Rank & Other Stocks to Consider
Deere currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the industrial products sector are Tennant Company (TNC - Free Report) , Encore Wire Corporation (WIRE - Free Report) and Arconic Corporation . All of these stocks sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Tennant Company has an expected earnings growth rate of 49.5% for the current fiscal year. The company’s shares have gained around 18% year to date.
Encore Wire has an estimated earnings growth rate of 49.5% for the current fiscal year. Year to date, the company’s shares have rallied nearly 36%.
Arconic has a projected earnings growth rate of 447% for the current fiscal year. The stock has appreciated around 21% so far this year.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%.
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.
Today, Download Marijuana Moneymakers FREE >>