Deere & Company (NYSE: DE) shares have advanced more than 35% since the beginning of January 2021; the company reported better than expected third-quarter this month and expects to see strong trends in the fourth quarter.
Fundamental analysis: The board of directors has agreed to increase the dividend by 16.7%
Deere & Company manufactures various equipment worldwide and operates through three segments: agriculture and turf, construction and forestry, and financial services. Deere shares have been moving in an uptrend last several months, and the company’s business has proven stability throughout the third fiscal quarter.
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Deere & Company reported better than expected third fiscal quarter results on August 20, 2021; total revenue has increased by 29.1% Y/Y to $11.53 billion, while the GAAP EPS was $5.32 (beats by $0.75). Total revenue has increased above expectations (+1.2 billion), and the company raised its outlook for the fiscal 2021 year across its major business segments.
Precision agricultural equipment should rise between 25% and 30% this year, small agriculture and turf sales should increase 25%, while construction and forestry sales should rise around 30%. Deere expects a net income of $5.7 billion to $5.9 billion for fiscal 2021 and continues to expect strong demand for farm and construction equipment.
“Looking ahead, we expect demand for farm and construction equipment to continue benefiting from favorable fundamentals. We are, at the same time, excited by the growing engagement with our digital platform, the John Deere Operations Center, as well as the continued adoption of precision technologies, which unlock greater value for our customers,†said John C. May, chairman, and chief executive officer.
The board of directors has agreed to increase the dividend by 16.7% to $1.05/quarterly share dividend, which will be payable on November 08 to stockholders of record as of September 30, 2021.
Technically looking, Deere shares could advance above the current price levels in September 2021, but this company is not undervalued with a market capitalization of $117.67 billion. Deere stock has seen massive gains since October 2020, the book value per share is around $50, and Deere trades at more than twenty times 2020 EBITDA.
Technical analysis: $340 represents the important support level
The critical support levels are $340 and $320; $400 and $440 represent the current resistance levels. If the price jumps above $400 resistance, it would be a signal to trade Deere shares, and the next target could be around $410.
On the other side, if the price falls below $340, it would be a strong “sell†signal, and the next target could be around $320.
Summary
Deere & Company reported better than expected third fiscal quarter results on August 20, 2021, and the board of directors has agreed to increase the dividend by 16.7% to $1.05/quarterly share dividend. Technically looking, Deere shares could advance above the current price levels in September 2021, but the risk/reward ratio is not good for long-term investors.
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