Deere & Co. - Momentum - TraderPlanet

Deere & Co. (DE) recently hit a new multi-year high at $97.36 after reporting awesome Q1 results that included a 20% earnings surprise. That sent estimates jumping higher, providing more upward support for this Zacks #1 rank stock.

Company Description

Deere & Company is a global leader in farm, forestry and construction equipment. The company was founded in 1837 and has a market cap of $39 billion.

Shares of DE got an extra boost on Feb 16 after the company reported excellent Q4 results that handily beat expectations.

First-Quarter Results

Revenue for the period was up 27% from last year to $6.12 billion. Earnings also looked great, coming in at $1.20, 20% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 23% over the last four quarters.

Deere’s largest segment, agriculture and turf, saw sales increase 21% on higher shipments and prices. Its biggest gain, however, came from its smaller segment, with construction and forestry sales up 81% from last year.

From a regional perspective, Canada and the US led the way, with sales up 35% from last year. Sales outside this region were up 22%, with South America seeing nice gains.

Financial Profile

As a capital intensive business, Deere has cash and equivalents of $3.4 billion and total debt of $24.2 billion. Its long-term debt-to-capital ratio of 72% is below the industry average of 76%.

Estimates

The strong quarter and optimistic view showed up in estimates, with the current year up 44 cents to $5.95. The next-year estimate added 47 cents, climbing to $6.95, a bullish 17% growth projection.

Valuation

But in spite of the gains, the valuation picture still looks good, with a forward P/E of 16X against its peer average of 19X.

12-Month Chart

On the chart, DE hit a new 52-week high at $97.36 on the news. Shares have pulled back a bit since, but the long-term trend is still higher. Look for support from the trend line on any weakness, take a look below.