Agriculture manufacturer Deere (DE) is set to report Q4 earnings later this week. Should investors be plowing into Deere stock or mucking out ahead of the report?
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What Wall Street Expects
Wall Street expects Deere to post earnings of $3.96 per share, implying a plunge of 12.6% from the same period last year. Revenues are tipped to come in at $9.99 billion, indicating a 7.7% year-over-year increase. Will Deere beat Wall Street estimates? As can be seen below, it has a strong track record in doing just that.
Key Issues Ahead of Earnings
In Q3, despite a challenging environment marked by global uncertainty, tariffs, and high interest rates, Deere achieved a 12.6% operating margin. Net sales and revenues, however, declined by 9% to $12.018 billion.
The Production and Precision Ag segment experienced a 16% decline in net sales to $4.273 billion, with operating profit at $580 million and a 13.6% operating margin. Meanwhile, Small Ag and Turf saw a slight year-over-year sales decrease of 1% to $3.025 billion.
Tariff costs in the quarter were approximately $200 million, with the full-year impact expected to be nearly $600 million. High interest rates and elevated used inventory levels continue to pressure demand in North America, with large ag equipment industry sales expected to be down approximately 30%.
These challenges are expected to have continued in the most recent quarter.
Wells Fargo remains a fan. It recently initiated coverage of Deere with an Overweight rating and $543 price target. The firm, which expects Deere to triple its installed base of subscription retrofit Precision Ag products this year, sees this portfolio pointing to sustained profit growth. However, the firm also notes a mixed cyclical outlook given high used tractor inventory.
This month Cathie Wood’s ARK also made a notable move into the industrial sector by purchasing 12,535 shares of Deere across its ARKQ and ARKX ETFs, valued at roughly $5.94 million. Deere’s growing use of automation and AI in farming equipment aligns with ARK’s focus on innovation and long-term technology trends.
Is DE a Good Stock to Buy Now?
On TipRanks, DE has a Moderate Buy consensus based on 7 Buy and 5 Hold ratings. Its highest price target is $609. DE stock’s consensus price target is $515.58, implying a 5.82% upside.
