Replies to post #389 on Deere and Co (DE)

[DewDiligence]

Addendum—DE’s FY4Q22 price increases more than offset increased production costs, and DE expects this to be true again during all of FY2023.

[DewDiligence]

Recession?

We now have DE’s blowout results and bullish guidance (#msg-170523741) to supplement CAT’s blowout results and bullish guidance (#msg-170300076).

Can these two bellwethers both be totally wrong?

[DewDiligence]

USDA expects_record—($161B)—US_net farm income in_2022, +20% YoY:

https://www.wsj.com/articles/high-commodity-prices-feed-a-boom-in-the-u-s-farm-belt-11671595947

Bullish for DE. The more profit farmers earn, the more they spend on new equipment and technology services tied to that equipment.

[DewDiligence]

DE FY1Q23* results (corrected)†

FQ1Q23* was another superb quarter with volume and pricing gains in all three operating segments. Price increases more than offset increased production costs, and DE expects this to be true during all of FY2023.

• FY1Q23 product sales (excluding revenue from DE’s finance unit) were $11.40B, +34% YoY.

• FY1Q23 GAAP EPS was $6.55, +127% YoY.

DE raised FY2023* net-income guidance by $750K to a range of $8.75-9.25B. Based on 299M diluted shares @1/31/23, the net-income guidance range equates to FY2023 GAAP EPS of $29.26-30.94, representing a YoY increase of 26-33%.

At the current share price (~$425 as I’m typing), the above EPS range represents a FY2023 P/E ratio of only 14-15.

*DE’s fiscal years end on Oct 31; FY1Q23 spanned the period from 11/1/22 to 1/31/23.

†My previous version of this post had incorrect numbers for DE’s 2023 net-income guidance.