Deere Share Price Gains 13% YTD: Buy, Sell or Hold the Stock?

Core Insights - Deere & Company (DE) shares have increased by 12.8% year to date, outperforming the Zacks Manufacturing - Farm Equipment industry's growth of 11.5% and the broader Zacks Industrial Products sector's gain of 6.7% [1][8] - Despite the stock's performance, the company has faced declining sales and earnings, with Q3 sales down 9% and earnings per share down 24% year over year [8][11] - The company has lowered its fiscal year 2025 net income outlook to between $4.75 billion and $5.25 billion, significantly below the previous year's $7.1 billion [15] Performance Comparison - DE's year-to-date stock performance has outpaced peers such as CNH Industrial N.V. (CNH), which declined by 1.4%, while AGCO Corporation (AGCO) increased by 14.1% [3][4] - The consensus estimate for fiscal 2025 earnings indicates a year-over-year decline of 27.32%, while fiscal 2026 shows a potential growth of 12.1% [17] Sales and Earnings Trends - DE has experienced a downtrend in sales for the past eight quarters, with earnings declining in seven consecutive quarters due to lower shipment volumes amid weak demand [9] - In Q3 fiscal 2025, DE's Agricultural and Turf equipment sales fell by 10.5% year over year, and the Construction and Forestry segment reported a 5.4% decline in sales [10][11] Market Conditions - The U.S. Department of Agriculture forecasts a 29.5% year-over-year increase in net farm income for 2025, but total crop receipts are expected to decrease by 2.3%, which may negatively impact demand for farming equipment [13] - DE anticipates a decline in net sales for Production and Precision Agriculture by 15-20% year over year in fiscal 2025 [14] Valuation and Investment Sentiment - DE is currently trading at a forward Price/Earnings ratio of 23.33X, which is a 9% premium to the industry average of 21.43X and higher than its five-year median of 15.83X [18] - The company's Value Score of D indicates that the stock is perceived as overvalued at this time [18] Long-Term Outlook - Despite current challenges, rising global food demand and increasing farm sizes are expected to sustain long-term demand for agricultural equipment [20] - The company's focus on precision agriculture and technologically advanced products may serve as catalysts for future growth [20]