Deere & Co. reports first-quarter numbers February 16

What's Happening

Heavy machinery maker Deere & Co. ( DE ) will report its first-quarter results February 16. The company will report its quarterly numbers before the market open, with the consensus calling for earnings of $1.13 per share. During the same period last year the company earned $0.61 per share, and while the stock sold off with the market correction, shares are currently down 3.9% on the year.

Technical Analysis

DE was recently trading at $151.80, down $20.16 from its 12-month high and $45.08 above its 12-month low. Technical indicators for DE are bullish with a strong upward trend. The stock has recent support above $151.50 and recent resistance below $166.00. Of the 15 analysts who cover the stock, eight rate it a "strong buy", one rates it a "buy", and six rate it a "hold". DE gets a score of 73 from InvestorsObserver's Stock Score Report.

Analyst's Thoughts

DE took a hit with the overall market over the last week, but overall analysts remain upbeat on the stock, as the underlying fundamentals of the economy remain on solid ground. The housing market continues to perform well, and an increase in federal spending on infrastructure also creates a favorable environment for the company. Commodities have been good in recent months, which is always a positive for companies like Deere and its biggest competitor, Caterpillar ( CAT ). DE will likely continue to trade in sympathy to the overall market, but with a P/E of 23, it has less downside risk that a majority of stocks that traded into a much higher valuation while the markets moved to record highs. DE has delivered consistent earnings beats over the last eight quarters, with revenues falling short of the consensus just once during the same time period. Expect another good set of quarterly numbers, and the stock to slowly make back some of its recent losses.

Stock Only Trade

If you're looking to establish a long stock position in DE, consider buying the stock under $151.75. Sell if it falls below $136.50 or take profits if it gets to $174.50.

Bullish Trade

If you want a bullish hedged trade on the stock, consider a March 125/130 bull-put credit spread for a 30-cent credit. That's a potential 6.4% return (66.5% annualized*) and the stock would have to fall 14.2% to cause a problem.

Bearish Trade

If you want to take a bearish stance on the stock at this time, consider a March 170/175 bear-call credit spread for a $0.40 credit. That's a potential 8.7% return (90.7% annualized*) and the stock would have to rise 12.2% to cause a problem.

Covered Call Trade

If you like the stock, but wish to lower your cost basis on a new position, you may want to consider a March $155.00 covered call. Buy DE shares (typically 100 shares, scale as appropriate), while selling the March $155.00 call for a debit of $145.90 per share. The trade has a target assigned return of 6.2%, and a target annualized return of 67.0% (for comparison purposes only).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Originally published on

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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