Deere down 15% despite strong results: ‘I like it for long-term’

on May 20, 2022
  • Deere & Co reports strong Q2 results and raises its full-year earnings outlook.
  • Shares of U.S. manufacturing company still tanked roughly 15% on Friday.
  • Hightower's Stephanie Link says she likes the stock for the long-term.

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Deere & Company (NYSE: DE) on Friday reported market-beating results for its fiscal second quarter. Shares are still down about 15%.

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Notable figures in Deere Q2 earnings report

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  • Net income printed at $2.10 billion that translates to $6.81 per share.
  • In Q2 last year, net income was capped at $1.79 billion or $5.68 a share.
  • Sales jumped 10.9% YoY to $13.37 billion, as per the earnings press release.
  • FactSet consensus was for $6.69 of EPS on $13.32 billion in sales.
  • Cost of sales was up 12.5%, contracting gross margin from 34.3% to 33.3%.

Sales from Production & Precision Agriculture, Small Agriculture & Turf, and Construction & Forestry went up 13%, 5.0%, and 9.0%, respectively. In the earnings press release, CEO John May said:

Looking ahead, we believe demand for farm equipment will continue benefitting from positive fundamentals in spite of availability concerns and inflationary pressures affecting our customers’ input costs.

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Deere & Co also raised its earnings outlook on Friday. The manufacturing company now forecasts $7.0 to $7.40 billion in earnings this year, including special items.

Commenting on the price action, Hightower’s Stephanie Link said the risk-off makes Deere very attractive for the long-term investor. On CNBC’s “Halftime Report”, she said:

The more Deere & Co falls, the numbers are going higher. Stock is now trading at 13.7 times forward. I like this for the long-term.

The stock has tanked nearly 30% in one month.


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