Deere & Company (NYSE:DE) is poised to gain from disciplined cost management, improvement in construction activity and the Wirtgen acquisition.
Caterpillar Inc. (CAT): Free Stock Analysis Report
Deere & Company (DE): Free Stock Analysis Report
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Axon Enterprise, Inc (AAXN): Free Stock Analysis Report
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Zacks Investment Research
The company has been witnessing upward revisions for the past 30 days. The Zacks Consensus Estimate for the current quarter and fiscal 2018 has gone up 7% and 1% to $2.76 and $9.66, respectively, over the past 60 days. A positive trend in estimate revisions reflects investors’ optimism over the company’s bright prospects.
The Zacks Consensus Estimate for the current quarter reflects year-over-year growth of 40% and for fiscal 2018, the estimate projects growth of 44.6% over the prior year.
Deere has a Zacks Rank #3 (Hold) and a VGM Score of A. Here V stands for Value, G for Growth and M for Momentum. Such a score allows you to eliminate the negative aspects of stocks and select winners. The VGM Score of A, along with some other key metrics, makes the company a solid choice for investors.
Below, we briefly discuss the company’s potential growth drivers.
Surprise History: Deere also outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 4.21%.
Price Performance: Shares of the company have outperformed the industry in a year’s time. The stock has gained around 19% compared with 12% growth recorded by the industry.
Return on Assets (ROA): Deere, currently, has a ROA of nearly 4%, while the industry's ROA is 3.7%. An above-average ROA denotes that the company is generating earnings by effectively managing assets.
Return on Equity (ROE): Deere’s trailing 12-month ROE of 27.7% reinforces its growth potential. The company’s ROE is higher than the ROE of 25.4% for the industry, highlighting the company’s tactical efficiency in using shareholders’ funds.
Growth Drivers in Place: Deere’s results will be driven by replacement demand in the agricultural sector and improvement in construction activity. The company is well poised to gain from the Wirtgen acquisition which significantly enhances the exposure of the former to global transportation infrastructure.
For fiscal 2018, Wirtgen is expected to add $3.2 billion in revenues. Deere anticipates Wirtgen’s operating margins to be 13-14% beyond fiscal 2018. Deere’s growth will be driven by improved operational performance due to disciplined cost management, and continued investment in innovative technology and solutions.
Bottom Line
Investors might want to hold on to the stock, at present, as it has ample prospects of outperforming peers in the near future.
Zacks Rank & Stocks to Consider
Some better-ranked stocks in the same sector are Axon Enterprise, Inc (NASDAQ:AAXN) , Caterpillar Inc. (NYSE:CAT) and W.W. Grainger, Inc. (NYSE:GWW) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Axon Enterprise has a long-term earnings growth rate of 25%. The stock has rallied 154% in a year’s time.
Caterpillar has a long-term earnings growth rate of 13.3%. The company’s shares have gained 44% during the past year.
Grainger has a long-term earnings growth rate of 12.1%. Its shares have appreciated 82% over the past year.
Will You Make a Fortune on the Shift to Electric Cars?
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think.
Caterpillar Inc. (CAT): Free Stock Analysis Report
Deere & Company (DE): Free Stock Analysis Report
W.W. Grainger, Inc. (GWW): Free Stock Analysis Report
Axon Enterprise, Inc (AAXN): Free Stock Analysis Report
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Zacks Investment Research
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