Is Deere stock a ‘buy’ after raised guidance?

Deere & Company (NYSE: DE), on Friday, said its profit more than doubled in the first quarter. Shares are up 6.0% this morning.

Deere stock up on raised guidance

Investors are cheering the company’s raised full-year guidance as well. Deere is now calling for $8.75 billion to $9.25 billion in net income this year.

It sees a 20% sales growth in production and precision agriculture and 10% to 15% in construction and forestry. In the earnings press release, CEO John C. May said:

Deere’s Q1 is a reflection of favourable market fundamentals and healthy demand for our equipment. We’re benefitting from an improved operating environment, which is contributing to higher levels of production.

Should you buy Deere stock today?

Versus its low in late September, Deere stock is now up 30% that does make it somewhat expensive. Still, Boris Schlossberg of BK Asset Management says it’s a great pick for the long-term.

The story is that 40% of the Black Sea crop is off market because of Ukraine conflict. That means farming income will stay strong for at least a couple more harvest cycles, assuming the Ukraine situation gets resolved this year.

A dividend yield of over 1.0% makes this industrial stock all the more attractive to own. And then of course there’s the possibility that the Ukraine war continues even beyond this year. On CNBC’s “Power Lunch”, Schlossberg said:

If it doesn’t [resolve], we have this permanent lack of supply. It requires a lot more precision agriculture which is where Deere plays. That means we’ll take a much higher yield per acre and farmers will turn to their equipment more.

Notable figures in Deere’s Q1 earnings report

Net income printed at $1.96 billion versus the year-ago $903 million Per-share earnings also climbed significantly from $2.92 to $6.55 Revenue increased just over 32% year-on-year to $12.65 billion FactSet consensus was $5.57 of EPS on $11.34 billion in revenue Production and precision agriculture sales gained 55% this quarter Construction and forestry sales also went up 26% versus last year

Other notable figures in the earnings report include a 14% annualised increase in small agriculture and turf sales to $3.0 billion.

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