Deere's stock price surged 8% after strong Q4 results, but fiscal 2025 outlook is dim

From Nasdaq: 2024-11-25 00:32:16

Deere’s stock price soared 8% after reporting Q4 results, with equipment revenue at $9.3 billion and earnings per share at $4.55. However, the outlook for fiscal 2025 is dim, leading to concerns of overvaluation. Deere’s profit in Q4 fell 47% year-over-year, impacting its stock performance. The company anticipates a 10-15% sales drop in 2025, below street estimates.

The recent surge in Deere stock has been inconsistent, with 2021 and 2022 returns at 29% and 27%, but a -5% dip in 2023. The Trefis High Quality Portfolio has outperformed S&P 500 consistently, offering better returns with less risk. Deere’s valuation appears slightly high at $440 per share, trading at 21x forward earnings.

Deere’s business cycle faces challenges with lower farm income and interest rates, impacting equipment sales. Potential tariffs and deportation threats may exacerbate inflation concerns, further pressuring Deere’s performance. Despite a projected 10-15% sales decline in 2025, Deere’s valuation multiple remains high at 21x forward earnings. Investors should consider broader risks and industry comparisons.



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