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Deere (DE) Stock Earnings Preview: What Investors Need to Know

Eric Dutram
Updated

Today’s video takes a closer look at Deere (DE), a company in the somewhat troubled agricultural equipment market. The sector has taken a beating thanks to uncertainty over commodity demand and prices, and the outlook for a turnaround isn’t too promising either. No wonder the industry is ranked in the bottom 25% overall heading into Deere’s report.

There is a silver lining for DE though, as the company has been a star in earnings season including an average positive surprise of over 17% in the last four quarters. And for the longer term, the company hasn’t misses estimates since late 2012 making for an impressive run. However, this hasn’t done much for the company in terms of performance, as shares are basically unchanged over the past four years.

DEERE & CO Price and EPS Surprise

DEERE & CO Price and EPS Surprise | DEERE & CO Quote

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The outlook isn’t great either, at least if we look to recent earnings estimates. As we can see in the chart below, estimates have largely tracked DE’s negative trends, with consensus estimates plunging for both the current year and next year. Worst of all, the 2017 consensus is actually below the 2016 one, suggesting sluggish growth prospects to say the least.

DEERE & CO Price and Consensus

DEERE & CO Price and Consensus | DEERE & CO Quote

That is probably why DE has a rank of just 3 (hold) and why the company has a ‘C’ for its fundamental score. The only positive for investors is that recent estimates have been a tad higher, giving this stock a positive earnings ESP and suggesting that it has at least a decent chance to post another beat, if nothing else.

Bottom Line

It is hard to bet against DE when it comes to beating earnings estimates, given the company’s impressive track record. But with sluggish growth prospects and a poor industry outlook, it is hard to get excited by DE ahead of their report either. All investors can hope for is that estimates have just fallen too far, anything else seems unlikely to take place for DE this coming report.

 

For a more in-depth analysis of DE, make sure to watch our short video on the topic. And for additional insights on the agricultural market, listen to the podcast below:


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