{"id":89211,"date":"2023-11-27T08:50:30","date_gmt":"2023-11-27T13:50:30","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/down-4-this-week-whats-next-for-deere-stock-after-downbeat-2024-guidance\/"},"modified":"2023-11-27T08:50:34","modified_gmt":"2023-11-27T13:50:34","slug":"down-4-this-week-whats-next-for-deere-stock-after-downbeat-2024-guidance","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=89211","title":{"rendered":"Down 4% This Week What\u2019s Next For Deere Stock After Downbeat 2024 Guidance?"},"content":{"rendered":"
\n

Deere<\/strong> (NYSE: DE) recently reported its Q4 fiscal 2023 results (fiscal ends in October), with revenues and earnings well above our estimates, but we believe that DE stock has only a little room for growth, as discussed below. The company reported revenue of $15.4 billion and adjusted earnings of $8.26 per share compared to the consensus estimates of $13.7 billion in sales and $7.47 earnings per share. In this note, we discuss Deere\u2019s stock performance, key takeaways from its recent results, and valuation.<\/p>\n

DE stock has shown strong gains of 35% from levels of $270 in early January 2021 to around $370 now, vs. an increase of about 20% for the S&P 500 over this roughly 3-year period. However, the increase in DE stock has been far from consistent. Returns for the stock were 27% in 2021, 25% in 2022, and -14% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 19% in 2023 – indicating that DE underperformed the S&P<\/strong> in 2023.<\/p>\n

In fact, consistently beating the S&P 500<\/strong> – in good times and bad – has been difficult over recent years for individual stocks; for heavyweights in the Industrials sector, including UNP, BA, and UPS, and even for the megacap stars GOOG, TSLA, and MSFT.<\/p>\n

In contrast, the Trefis High Quality Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year<\/strong> over the same period. Why is that?<\/strong> As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index, less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.<\/p>\n

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Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could DE face a similar situation as it did in 2023 and underperform the S&P<\/strong> over the next 12 months – or will it see a strong jump? From a valuation perspective, DE stock looks like it will likely see higher levels. We now estimate Deere\u2019s Valuation<\/strong> to be $417 per share (versus $475 earlier), reflecting only a 12% upside from its current price of around $370. Our forecast is based on a 14x P\/E multiple for DE and expected earnings of $28.75 on a per-share basis for the full fiscal 2024. The 14x P\/E ratio aligns with the stock\u2019s last three-year average. The company provided a bleak outlook for 2024, with revenues falling at least 10% for all segments and earnings estimated to be in the range of $7.75 billion and $8.25 billion, well below the consensus estimate of $9.3 billion.<\/p>\n

Deere\u2019s revenue of $15.4 billion in Q4 was down 1% y-o-y, as an 11% rise in construction and forestry segment sales was more than offset by a 13% fall in small agriculture and turf sales and a 6% decline in production and precision agriculture revenue. The company continued to benefit from a robust pricing environment, but agriculture equipment volume declined. Deere\u2019s profit of $2.4 billion in Q4 2023 reflected a 5% increase from its $2.2 billion profit figure in the prior-year quarter, led by higher operating margins across segments, mainly production and precision agriculture, which saw a 300 bps y-o-y rise. The earnings per share of $8.26 was higher than the $7.44 figure in the prior year\u2019s quarter, bolstered by a 5% fall in total shares outstanding amid share repurchases.<\/p>\n

Looking forward, Deere expects a double-digit decline in sales for all of its manufacturing segments in 2024. This can be attributed to declining farm income. The U.S. farm income is expected to fall 25% y-o-y in 2023 after a sharp 31% rise in 2022. Deere\u2019s business is cyclical, and its sales volume is now expected to enter mid-cycle levels after hitting a cyclical peak this year. Overall, we think that investors will likely be better off looking at other sector peers for higher gains in the long term.<\/p>\n

While DE stock looks like it now has little room for growth, it is helpful to see how Deere\u2019s Peers<\/strong> fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons<\/strong>.<\/p>\n

Invest with Trefis <\/strong>Market Beating Portfolios<\/strong><\/p>\n

See all Trefis <\/strong>Price Estimates<\/strong><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Deere (NYSE: DE) recently reported its Q4 fiscal 2023 results (fiscal ends in October), with revenues and earnings well above our estimates, but we believe that DE stock has only a little room for growth, as discussed below. The company reported revenue of $15.4 billion and adjusted earnings of $8.26 per share compared to the […]<\/p>\n","protected":false},"author":1,"featured_media":89212,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-89211","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"\nDown 4% This Week What\u2019s Next For Deere Stock After Downbeat 2024 Guidance? | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Deere (NYSE: DE) recently reported its Q4 fiscal 2023 results (fiscal ends in October), with revenues and earnings well above our estimates, but we\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=89211\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Down 4% This Week What\u2019s Next For Deere Stock After Downbeat 2024 Guidance? 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