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Deere & Co. shares surge after quarter results. Should you buy the stock now?

By:
on Nov 24, 2022
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  • Deere & Co. stock has risen by 24% YTD
  • The stock has hit resistance after strong Q4 earnings
  • The stock is a buy on a retracement

Shares of Deere & Company (NYSE:DE) closed up 5% on Wednesday after strong earnings. The stock has now gained  13% in a month. The stock is a mix of value and growth for investors this year.

Expectations were already high for Deere ahead of the fourth quarter earnings on Wednesday. Despite persistent supply chain issues, inflation, and macroeconomic woes, Deere has continuously negated the challenges. Through higher pricing and improved shipments, the company was able to wither costs and boost revenues. The same was observed in the fourth quarter earnings and investor notes.

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Deere reported Q4 earnings of $7.44 per share, an increase from $4.1 per share in the prior year. The earnings surpassed estimates of $7.10 EPS. The revenue for the quarter came at $15.54 billion or £12.84 billion, from $11.33 billion or £9.36 billion last year. Wall Street expected $13.39 billion or £11.1 billion in revenues. The company attributed the robust quarter to a healthy demand amid increased infrastructure outlays. Deere now expects a net income of $8.0 billion (£6.61 billion) to $8.5 billion (£7.02 billion) in FY23.

Deere’s Q4 earnings and solid FY23 projections boost the outlook for the stock, which is up $24.97% year-to-date. However, timing is everything when making investing decisions. We believe the stock is due for a correction, and buying at a lower price guarantees a better risk-return ratio.

Deere stock hits resistance – Watch key Fib. levels 

DE Stock Chart by TradingView

A technical outlook on the weekly chart shows Deere trading at the highest level since April, around $440. The level coincides with a key resistance that sent the stock tumbling back to the lows of $284 in July. 

The RSI reading of 68 suggests that Deere is nearly overbought. A potential correction is likely, and the stock should be bought lower.

DE potential buy zones

Deere stock remains on our watch list after the quarter results and outlook. Investors should monitor $400 as potential support for a bullish reversal. 

Alternatively, Fibonacci retracement levels at 38.2% ($385.85), 50% ($366.99), and 61.8% ($348.12) should be watched.

Deere stock can also be bought after a confirmed breakout of the $440 resistance if the bullish momentum continues.