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6 Reasons to Add Deere (DE) Stock to Your Portfolio Now
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Solid fundamentals in the farm sector courtesy of higher agricultural commodity prices and improving demand in the construction sector bode well for Deere & Company (DE - Free Report) . Focus on incorporating advanced technologies and features in its products, and intensifying investments in precision agriculture will also drive growth for the company.
The company currently has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let's delve deeper into the factors that make the Deere stock a compelling investment option at the moment.
Impressive Price Performance
The stock has appreciated 122.2% over the past year, compared with the industry’s rally of 116.2%. Meanwhile, the S&P 500 has risen 40.1%.
Image Source: Zacks Investment Research
Superior Return on Assets
Deere currently has a Return on Assets (ROA) of 6.0%, higher than the industry’s 4.1%. An above-average ROA denotes that the company is generating earnings by effectively managing its assets.
Positive Earnings Surprise Trend
Deere has outpaced the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 67.9%.
Solid Fiscal 2021 Outlook
Deere expects net income for fiscal 2021 between $5.3 billion and $5.7 billion, backed by improving conditions in the farm and construction sectors. The mid-point of the guided range suggests year-over-year improvement of 100%.
Upbeat Growth Projections
The Zacks Consensus Estimate for fiscal 2021 earnings per share is currently pegged at $17.89, indicating growth of 106% from the prior year. The same for fiscal 2022 stands at $20.52, suggesting year-over-year improvement of 14.7%. The stock has an estimated long-term earnings growth rate of 20%.
Other Growth Drivers
Improving farm income driven by recovering agricultural commodity prices has led farmers to resume investing in new equipment and replacing their aging fleets. Deere expects grain and oilseed consumption to outstrip supply this year. While government support is expected to decrease this year, principal crop cash receipts in the United States are expected to increase 30% gaining from higher commodity prices. Further, 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 as well as the next.
Also, backed by strength in the housing market as well as non-residential sector, the company’s Construction & Forestry segment is poised well to deliver improved results. Deere acquired the world’s leading road-construction equipment maker, Wirtgen, for $5.2 billion that significantly enhanced the company’s exposure to global transportation infrastructure. Thus, the company is well positioned to gain from the increased spending on U.S. infrastructure.
Deere remains well-poised for growth over the long term, backed by steady investments in new products and geographies. Launching innovative products equipped with advanced technologies and features, investments in precision agriculture provides it a competitive edge. It has the vision to revolutionize agriculture with technology and make farming automated, easy to use and more precise across the production process. Farmers’ growing reliance on advanced technology to run their complex operations smoothly will continue to fuel Deere’s revenues.
Other Stocks to Consider
Some other top-ranked stocks in the Industrial Products sector are Greif, Inc. (GEF - Free Report) , Lindsay Corporation (LNN - Free Report) and Pentair plc (PNR - Free Report) . All of these stocks sport a Zacks Rank #1, at present.
Greif has an anticipated earnings growth rate of 47.2% for fiscal 2021. The company’s shares have gained around 29.3%, year to date.
Lindsay has an estimated earnings growth rate of 1% for the ongoing fiscal year. Year to date, the company’s shares have rallied 29.1%.
Pentair has a projected earnings growth rate of 26% for the current year. The stock has appreciated around 29%, so far this year.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Image: Bigstock
6 Reasons to Add Deere (DE) Stock to Your Portfolio Now
Solid fundamentals in the farm sector courtesy of higher agricultural commodity prices and improving demand in the construction sector bode well for Deere & Company (DE - Free Report) . Focus on incorporating advanced technologies and features in its products, and intensifying investments in precision agriculture will also drive growth for the company.
The company currently has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let's delve deeper into the factors that make the Deere stock a compelling investment option at the moment.
Impressive Price Performance
The stock has appreciated 122.2% over the past year, compared with the industry’s rally of 116.2%. Meanwhile, the S&P 500 has risen 40.1%.
Superior Return on Assets
Deere currently has a Return on Assets (ROA) of 6.0%, higher than the industry’s 4.1%. An above-average ROA denotes that the company is generating earnings by effectively managing its assets.
Positive Earnings Surprise Trend
Deere has outpaced the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 67.9%.
Solid Fiscal 2021 Outlook
Deere expects net income for fiscal 2021 between $5.3 billion and $5.7 billion, backed by improving conditions in the farm and construction sectors. The mid-point of the guided range suggests year-over-year improvement of 100%.
Upbeat Growth Projections
The Zacks Consensus Estimate for fiscal 2021 earnings per share is currently pegged at $17.89, indicating growth of 106% from the prior year. The same for fiscal 2022 stands at $20.52, suggesting year-over-year improvement of 14.7%. The stock has an estimated long-term earnings growth rate of 20%.
Other Growth Drivers
Improving farm income driven by recovering agricultural commodity prices has led farmers to resume investing in new equipment and replacing their aging fleets. Deere expects grain and oilseed consumption to outstrip supply this year. While government support is expected to decrease this year, principal crop cash receipts in the United States are expected to increase 30% gaining from higher commodity prices. Further, 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 as well as the next.
Also, backed by strength in the housing market as well as non-residential sector, the company’s Construction & Forestry segment is poised well to deliver improved results. Deere acquired the world’s leading road-construction equipment maker, Wirtgen, for $5.2 billion that significantly enhanced the company’s exposure to global transportation infrastructure. Thus, the company is well positioned to gain from the increased spending on U.S. infrastructure.
Deere remains well-poised for growth over the long term, backed by steady investments in new products and geographies. Launching innovative products equipped with advanced technologies and features, investments in precision agriculture provides it a competitive edge. It has the vision to revolutionize agriculture with technology and make farming automated, easy to use and more precise across the production process. Farmers’ growing reliance on advanced technology to run their complex operations smoothly will continue to fuel Deere’s revenues.
Other Stocks to Consider
Some other top-ranked stocks in the Industrial Products sector are Greif, Inc. (GEF - Free Report) , Lindsay Corporation (LNN - Free Report) and Pentair plc (PNR - Free Report) . All of these stocks sport a Zacks Rank #1, at present.
Greif has an anticipated earnings growth rate of 47.2% for fiscal 2021. The company’s shares have gained around 29.3%, year to date.
Lindsay has an estimated earnings growth rate of 1% for the ongoing fiscal year. Year to date, the company’s shares have rallied 29.1%.
Pentair has a projected earnings growth rate of 26% for the current year. The stock has appreciated around 29%, so far this year.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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