Early Friday morning, Action Alerts PLUS holding Deere & Co (DE) reported quarterly results that simply crushed consensus expectations.

Revenue soared 32% higher vs. the year-ago quarter. Production and precision agriculture sales climbed 55% year over year and the combination of higher shipment volumes, price realization and the drag of supply-chain woes being removed led segment profits to pop more than 300%.

For the coming year, Deere sees segment revenue up 20%, year over year, with roughly 14 points of price improvement, which tells us more margin expansion lies ahead. Deere also sees its construction and forestry segment increasing 10%-15% year over year — we’ll look for more color on that during this morning’s earnings conference call.

All in all, it was a wonderful earnings report and one that spoke to our reasons behind owning DE shares in the portfolio.

Normally an earnings report like this one would lead DE shares higher Friday, but given the market rethink we discussed in our morning comments, the stock may not get the lift it normally would.

Should broader market variables weigh on Deere shares, pulling them closer to the $400 level, we would be inclined to revisit our current Two rating on DE. After the company’s earnings call, we’ll also have more thoughts on our current, above-consensus price target of $470.


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