Bellwether shares soar, guiding “another strong year” after earnings jump

monastery (DE) gave a solid outlook for 2023 early Wednesday after beating fourth-quarter earnings and revenue estimates, despite supply headwinds. DE stock jumped out of the overbought zone.


Deere, an industrial leader, benefited from farm equipment prices that had to hit record highs due to a shortage of spare parts, as well as a hike in crop prices. These benefits have been offset by economic uncertainty and inflationary pressures.

Additionally, both Deere and Larva CAT expects to benefit from US infrastructure spending. DE stock earns a spot on the prestigious IBD Leaderboard.

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dir profits

estimatesAnalysts polled by FactSet expect Deere’s earnings for the October quarter to rise 73% to $7.11 per share. Total revenue saw a 27% jump to $14.4 billion.

consequences: Deere’s earnings jumped 81% to $7.44 a share, a significant acceleration from the quarter-ending July’s 16% advance. Revenue jumped 37% to $15.54 billion, in the third quarter of accelerating sales growth.

prospects: Deere expects fiscal 2023 net income to be between $8 billion and $8.5 billion, higher than consensus and up from $7.13 billion in fiscal 2022. Analysts now see DE earnings per share up 11.4% to $25.92.

“Deere looks forward to another strong year in 2023 based on positive farm fundamentals and fleet dynamics, as well as increased investment in infrastructure,” CEO John May said in Deere’s earnings release Wednesday.

Last summer, the maker of farm and construction equipment was unable to complete the large tractors due to a parts shortage. But May said on Wednesday that the strong results for the fourth quarter and fiscal year 2022 reflected “extraordinary efforts to overcome supply chain constraints, increase plant production and deliver products to our customers”.

Of stock

Shares of Deere rose 5.1% to 437.73 in the stock market today.

DE stock crossed the buy point of 406.12 cups by handle on November 8. It has now been extended, which means the shares are not in the buying range. Buy range extends to 426.43, leaderboard chart analysis shows.

DE stock’s RSI hit a new high before Wednesday after rising during the summer.

DE stock monitors are very good in terms of major IBD ratings. It earns an excellent composite rating of 99. It also carries an EPS rating of 94 and an RS rating of 92, both of the best 99.

CAT stock fell 0.1% Wednesday. Shares briefly regained a 238 pint buy on Wednesday. In late October, Caterpillar broke third-quarter earnings estimates, and revenue also outperformed.

Another agricultural stock to watch is the grain processor Archer Daniels Midland (ADM), a fertilizer producer CF Industries (CF) f Lindsey (LNN), an irrigation equipment producer also playing a role in the green hydrogen infrastructure space.

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Deere tractors are facing a parts shortage

Tractor maker Deere has been growing sales with strong clips, driven strongly in machinery prices and demand for large farm equipment. But shortages of chips and other parts resulted in partially built machines, which were left waiting for parts for workers to complete assembly.

Profitability has been pressured by supply chain challenges, resulting in significant production inefficiencies,” Edward Jones analyst Matt Arnold wrote in a note this summer.

These shortcomings are expected to recede as supply chains return to normal. “Demand for Deere products remains very strong, and we expect the favorable demand environment to continue, given higher grain prices and increased infrastructure spending,” added Arnold.

An aging agricultural machinery fleet creates an increased demand for replacement. Deere also manufactures excavators, backhoes, dump trucks and wheel loaders for the construction market.

Arnold rates DE stock a Buy.

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