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Deere & Co. reports Q1 earnings February 17

What's Happening

Deere & Co. ( DE ) is expected to report its fiscal first-quarter numbers before the market open on February 17. Analysts are calling for earnings of 51 cents per share on revenue of $4.62 billion. The stock has trended sharply higher since the presidential election, and shares are currently up 5.9% since the beginning of the year.

Technical Analysis

DE was recently trading at $110.15, just $0.10 below its 12-month high and $35.24 above its 12-month low. Technical indicators for DE are bullish and the stock is in a strong upward trend. The stock has recent support above $105.60 and is trading above recent resistance. Of the 19 analysts who cover the stock, six rate it a "strong buy", eight rate it a "hold", and five rate it a "strong sell". The stock receives S&P Capital IQ's 3 STARS "Hold" ranking.

Analyst's Thoughts

Enthusiasm is running higher for Deere, and its main competitor Caterpillar ( CAT ). The current outlook is strong for the companies based on President Trump's intentions to boost infrastructure spending to spur the economy, and his ambitious plan to build a wall on the Mexican border. Each of these ambitions should result in stronger demand for the Deere's heavy machinery. The stock has enjoyed major gains since the November election, but even with those gains the valuation is not too higher to avoid the stock. DE has a P/E of 22.8, and analysts expect to see earnings growth of 16.4% during the year. Of course, those estimates could be grossly understated depending on how quickly President Trump starts to move on his plans, assuming he is able to do so. Wall Street is incredibly bullish on the stock, but it will still need to show a good set of quarterly numbers in order for shares to build on recent gains. The company has a solid earnings track record, posting better than expected earnings in each of the last 16 quarters, and revenue beats each of the last four quarters. Look for another solid report, and the stock to move higher in reaction.

Stock Only Trade

Bullish Trade

If you want to set up a bullish hedged trade on DE, consider a June 85/90 bull-put credit spread for a 35-cent credit. That's a potential 7.5% return (21.8% annualized*) and the stock would have to fall 18.0% to cause a problem.

Bearish Trade

If you want to take a bearish stance on DE at this time, consider a June 130/135 bear-call credit spread for a 25-cent credit. That's a potential 5.3% return (15.3% annualized*) and the stock would have to rise 18.3% to cause a problem.

Covered Call Trade

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 InvestorsObserver.com


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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