Shares of Deere & Co (DE) are trading more than 6% lower Wednesday morning after the company reported fiscal 4th quarter results accompanied by a weak full-year outlook for 2024.
The manufacturer of agricultural, construction, and turf equipment did perform well to finish off fiscal 2023, though. Sales may have fallen nearly 1% but the $15.41 billion reported was still way ahead of the FactSet consensus of $13.64 billion.
While production & precision ag sales and small agriculture & turf sales both slipped, construction & forestry sales picked up the slack to keep losses minimal.
Meanwhile, net income climbed modestly to $2.37 billion from $2.25 billion last year. This represented $8.26 a share, which outperformed the FactSet consensus of $7.46.
The real takeaway from Deere’s earnings day, though, was the lackluster forecast looking ahead to the upcoming year. Net income is expected to fall somewhere between $7.75 billion and $8.25 billion, short of the $9.31 billion FactSet consensus.
This shocked investors and analysts alike as the company said just a few months ago to expect big spending on government megaprojects in 2024. Instead, though, the company is now forecasting drops in sales across the board. While the industry as a whole is forecasting a down year, Deere’s expectations are lower than the rest.
Still, some analysts suspect this could be a case of “under promising and over delivering”. The company wants to cover a worst-case scenario and is simply setting the bar low, potentially setting up for an overperformance in the year ahead.
Whatever the case, DE is feeling the negative pressure on stock performance. It sat at $446/share in June this year but has fallen to $361/share with this news. So, is it time for investors to cut losses and move on from this stock?
Not quite. We’ve taken a deeper look at DE through the VectorVest stock analysis software and found reason to hold onto hope still.
DE May Have Poor Timing, But the Stock Still Has Good Safety and Excellent Upside Potential
VectorVest simplifies your trading strategy and helps you tune out the external noise by focusing on what matters most to investors. You’re given clear, actionable insights in 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT).
Each sits on its own scale of 0.00-2.00, with 1.00 being the average. This allows for quick and easy interpretation. You’re even given a buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. As for DE, here’s what you need to see:
- Excellent Upside Potential: The RV rating is computed from a deep analysis and comparison of the stock’s long-term price appreciation potential (forecasted 3 years out), AAA corporate bond rates, and risk. It offers much better insight than a simple comparison of price to value alone. DE has an excellent RV rating of 1.49 and is undervalued right now. Its current value is $547.41.
- Good Safety: The RS rating is an indicator of risk. It’s derived from a number of factors - financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and more. DE has a good RS rating of 1.15.
- Poor Timing: The one thing holding this stock back right now is the negative price trend that has gripped the stock for some time now. The poor RT rating of 0.76 reflects the stock’s performance. The rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 1.14 is good for DE, and the only thing preventing this stock from being a BUY right now is poor timing. In the meantime, VectorVest has placed a HOLD recommendation on DE.
That being said, you’ll want to stay up to date with this opportunity and watch for the RT rating to start moving in the right direction to signal a BUY! Get a free stock analysis today to learn more about how the system works to save you time and stress while empowering you to win more trades.
Want These Types of Insights at Your Fingertips so You Can Win More Trades?
Use VectorVest to analyze any stock free. VectorVest is the only stock analysis tool and portfolio management system that analyzes, ranks and graphs over 18,000 stocks each day for value, safety, and timing and gives a clear buy, sell or hold rating on every stock, every day.
VectorVest advocates buying safe, undervalued stocks, rising in price. DE is forecasting a down year in 2024, and this news sent shares 6% lower in Wednesday’s trading session. While the stock does have poor timing, it has good safety and excellent upside potential.
Before you invest, check VectorVest! Click here to ANALYZE ANY STOCK FREE and see our system in action!