Deere’s (NYSE: DE), stock price, has been on a downward trend for the last few months. It continues to trail other industrial firms like Caterpillar or General Electric Aviation. On Monday, it fell to $345, its lowest level since May 2023. It is down by more than 22% since its peak in 2023.
Deere’s fundamentals are solid
John Deere dominates the agricultural equipment industry. The company’s main products include tractors, combines and harvesters. Caterpillar Hitachi Komatsu AGCO and CNH Industrial are some of its main competitors.
Deere’s revenue has grown from $31.2 billion to $55 billion over the last year, and $58 billion over the training 12 months.
It has also become very profitable, as its net profit jumped from $2.7 billion to $10 billion during the last financial period. It is crucial to note that the company has increased its shareholder returns over the last few years.
It is only important when the number of outstanding shares falls that a company’s net profit increases. The data shows that the total number of outstanding shares has dropped from 313 million to 275 millions. The company’s earnings per share (EPS), which was $2.1 in April of 2020, has increased to $8.56 for the last quarter.
Deere has performed well at a time of challenges for the manufacturing industry. One of the biggest challenges was in supply chains, when companies were unable to obtain raw materials including semiconductors due to the pandemic.
The prices of corn, wheat and soybeans are all down
Deere’s stock price is down as investors remain concerned about its growth. According to the most recent financial reports, the company’s net income was $2.37 billion for the first quarter of this year. This is down from $2.86 million in the same period in last year.
Deere faced many challenges including slowing growth, which led to a 12% drop in worldwide sales. Sales fell by 9% in the first half of the company’s financial year.
The recent softening of agricultural prices is largely responsible for this slowdown. Corn, an extremely popular crop, fell by more than 52% since its peak in 2022. It was trading at the lowest level since October 2020.
Soybeans have also fallen in price for six months running and are now trading at their lowest levels since September 2020. Over 44% of its highs from 2021 have been lost. Wheat has also fallen by more than 60%.
When prices are low, most farmers will reduce their production and purchases of inputs.
Analysts expect this week’s Deere results to be just as bad. Analysts expect that sales will be down to $10.93 billion from $15 billion a year ago.
In fact, many analysts have lowered their earnings over the last few months. This explains why this stock has performed below the market.
The company’s most recent results predicted that the agricultural and turf businesses would decline between 10% and 20 % in the current fiscal. The company’s construction and forest business will also be down.
Deere is a good investment.
Deere, and other large agricultural companies are struggling. Fundamentally, I think that these problems will continue over the next few months because the prices of agricultural commodities are still significantly lower.
Deere, however, is a company of high quality with a large market share in agriculture. It holds a market share of 50% in certain key segments in the United States.
Deere is a company that has historically been cyclical, doing well when the agricultural industry does well. The company is now trading at a P/E of 10,36, which is lower than the average industry value of 22.
Undervalued companies are not always the best investment. Overvalued companies like Nvidia or Microsoft have historically been some of the most successful investments. Deere’s stock will not bounce back immediately.
Deere Stock Price Analysis
The weekly chart shows the DE stock has been on a downward trend in the last few years. The price dropped from $436 to $340 in 2022. Recently, it dropped below $350. This was its lowest point since May 2023.
It has also fallen by more than the 50-week moving mean, indicating that the bears have taken control. The stock has also fallen below the 23,6% retracement level. The stock is likely to continue dropping as sellers aim for the key support of $300.
This post Deere stocks at risk as corn prices, soybean prices, and wheat fall may be updated as new information unfolds
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