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Deere Q4 Preview: Can Shares Remain Strong?

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The Zacks Industrial Products sector has fared relatively well in 2022, down roughly 10% and outperforming the general market by a fair margin.

A titan in the realm, Deere & Company (DE - Free Report) , is on deck to unveil Q4 earnings on November 23rd, before the market open.

Illinois-based Deere is the world’s largest producer of agricultural equipment, manufacturing agricultural machinery since 1837 under the iconic John Deere brand with its signature green and yellow color scheme.

Currently, the company carries a Zacks Rank #3 (Hold) paired with an overall VGM Score of a D.

How does everything else stack up? Let’s take a closer look.

Share Performance & Valuation

DE shares have been notably strong in 2022, up more than 20% and crushing the general market’s performance.

Zacks Investment Research
Image Source: Zacks Investment Research

Over the last month, DE shares have continued on their market-beating trajectory, tacking on a solid 7.5% in value.

Zacks Investment Research
Image Source: Zacks Investment Research

The positive price action of DE shares tells us that buyers have consistently been present, something we can’t say for many stocks in 2022.

DE shares currently trade at a 15.5X forward earnings multiple, modestly below its 16.8X five-year median and reflecting a 13% discount relative to its Zacks Industrial Products sector.

Zacks Investment Research
Image Source: Zacks Investment Research

The company carries a Style Score of a C for Value.

Quarterly Estimates

Four analysts have dialed back their earnings outlook over the last several months. Still, the Zacks Consensus EPS Estimate of $7.08 indicates a stellar 71% Y/Y uptick in earnings.

Zacks Investment Research
Image Source: Zacks Investment Research

The company’s top-line is also in solid shape; the Zacks Consensus Sales Estimate of $13.6 billion suggests an improvement of more than 32% Y/Y.

Quarterly Performance

DE has consistently exceeded bottom-line estimates, beating out the Zacks Consensus EPS Estimate in nine of its last ten quarters.

Still, the one miss during the timeframe came in its latest print, when the company fell short of earnings expectations by roughly 7%.

Sales results have also been primarily positive; DE has registered eight revenue beats across its last ten quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Image Source: Zacks Investment Research

Putting Everything Together

DE shares have outperformed the general market across several timeframes in 2022, indicating that buyers have consistently stepped up.

The company’s forward earnings multiple resides modestly below its five-year median and Zacks sector average.

Analysts have been bearish in their earnings outlook as of late, with estimates suggesting solid Y/Y upticks in both revenue and earnings.

The company has primarily exceeded quarterly estimates but fell short of EPS expectations in its latest release, snapping a streak of positive surprises.

Heading into the print, Deere & Company (DE - Free Report) carries a Zacks Rank #3 (Hold) paired with an Earnings ESP Score of -2.5%.


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