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Should you buy Deere stock after its upbeat guidance for 2023?

on Nov 23, 2022
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  • Deere reports market-beating Q4 results and issues upbeat future guidance.
  • Melius Research's Rob Wertheimer shares his outlook on the Deere stock.
  • Shares of the industrial equipment manufacturer are up nearly 7.0% today.

Deere & Company (NYSE: DE) is trading significantly up this morning after reporting its fourth-quarter sales that topped Street expectations by more than $2.0 billion.

Is Deere stock a ‘buy’ right now?

Shares are also up because the industrial equipment manufacturer issued positive guidance for the future.

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Deere forecasts its net income to fall between $8.0 billion and $8.50 billion in fiscal 2023. In comparison, analysts were at $7.9 billion only. On CNBC’s “Worldwide Exchange”, Rob Wertheimer of Melius Research said:

The story this quarter for industrials has been pretty good demand; farmers are buying as much equipment as they can. The trick has been supply chain management – so trying to get margins back into shape.

On that front, Deere said all of its business segments improved operating margins this quarter.

Wertheimer sees upside in the Moline-headquartered firm to $463 – that may warrant buying Deere stock here as it represents more than a 10% upside on its previous close.

When you look at the flood of money coming into the U.S. as reshoring happens, there’s a lot of beneficiaries in industrial world. We think there’s a lot of room in industrial space as consumer economy cools off and spending come back.

Key takeaways from Deere’s Q4 earnings report

  • Earned $2.25 billion versus the year-ago $1.28 billion
  • Per-share earnings also climbed from $4.12 to $7.44
  • Sales went up 37.2% year-over-year to $15.54 billion
  • Consensus was $7.11 a share on $13.44 billion in sales

Deere CEO John May attributed the Q4 strength and upbeat guidance partly to higher crop prices. In the earnings press release, he said:

Deere is looking forward to another strong year in 2023 based on positive farm fundamentals and fleet dynamics as well as an increased investment in infrastructure.