Don't Sweat the Deere Stock Pullback

DE has chart support in place

facebook twitter linkedin

Two weeks ago, Deere & Company (NYSE:DE) looked like it was going the way of boring stock Hershey (HSY). The solid, foundational name kept climbing even amid broad market choppiness. Then the floor suddenly gave out, and DE shed nearly 10% of its value in three trading days. How should investors react to the pullback?

After an April 20 record high of $446.76, Deere stock preceded to give back roughly 14% in the span of a week. The good news is the shares' 160- and 200-day moving averages have so far contained the pullback. Year-to-date, the equity remains up 13.8% despite that sharp end of month drop. Deere also offers a dividend yield of 1.11% with forward dividend of $4.20.

Moreover, Deere stock provides an intriguing valuation for the level of growth they are expected to produce for the next couple of years. For fiscal 2022, DE is expected to grow revenues by 19.4% and earnings by 19.5%. Deere is also estimated to increase revenues by 8.1% and earnings by 15.5% for fiscal 2023, making Deere stock’s forward price-earnings ratio of 16.64 and a price-sales ratio of 2.68 appear much more attractive for value investors.

However, DE's balance sheet does present a risk for long-term investors. The machinery and equipment manufacturer holds $47.8 billion in total debt and only $3.8 billion in cash. Nonetheless, Deere stock's upside potential is solid in the short-term due to the company’s strong growth and relatively low valuation.


Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

Best stocks for October and worst stocks for October


Special Offers from Schaeffer's Trading Partners