Deere & Co.: A Quiet Industrial Leader Gaining Steam

Core Viewpoint - The industrial sector, particularly represented by Deere & Company, is experiencing significant outperformance in 2025, contrasting with the technology sector's focus on AI innovation [1][2]. Industry Performance - The Industrial Select Sector SPDR Fund (XLI) has increased nearly 10% year-to-date, outperforming the Technology Select Sector SPDR Fund (XLK), which has risen 6.3% [2]. - Deere & Company has surged over 20% year-to-date and is trading near a key breakout level [2]. Institutional Confidence - Institutional inflows into Deere have totaled nearly $14 billion over the past 12 months, with $9 billion flowing in during the last two quarters alone, indicating strong confidence in the company's long-term prospects [3]. - The stock has seen only $7.7 billion in outflows during the same period, further emphasizing institutional support [3]. Analyst Ratings - Deere currently holds a consensus Hold rating from 21 analysts, suggesting it is fairly valued at current levels [4]. - The average price target for Deere aligns closely with its current price, indicating that existing investors may want to maintain their positions [4]. Dividend Information - Deere offers a dividend yield of 1.26%, with a solid history of increasing dividends over the past four years, making it appealing to conservative investors [6]. - The stable dividend can help mitigate short-term volatility while enhancing long-term returns amid interest rate uncertainties [6]. Stock Valuation - Deere's current P/E ratio is just under 25, which is slightly elevated compared to the broader industrial sector [7]. - The forward P/E ratio is around 23, placing it in a middle ground between value and high-growth stocks [8]. Earnings Performance - In fiscal Q2 2025, Deere reported earnings of $6.64 per share, exceeding the consensus estimate of $5.72 [8]. - Revenue for the quarter was $11.17 billion, down nearly 18% year-over-year but above the consensus of $10.80 billion, showcasing operational resilience [9]. Technical Analysis - Technically, Deere is forming a bullish flag-like pattern near its 52-week high, with a potential breakout above the $532 level that could lead to a multi-week advance [10]. - The stock is outperforming the broader industrial sector, attracting attention from technical traders and momentum-focused funds [11]. Overall Assessment - Deere may not have the speculative appeal of tech stocks but demonstrates strong institutional backing, solid execution, and a consistent technical structure [13]. - While not an outright bargain, Deere is not overpriced, and a breakout above $532 could present a high-probability opportunity for upside continuation [14].