Deere Earnings: Ag Demand Remains Consistent, While Construction Shows Great Promise

Deere reported strong fiscal third-quarter results, as ag demand continues to run strong. Construction is also shaping up to be a strong contributor to earnings growth in 2023. After taking stock of the quarter, we raised our fair value estimate by $2 to $379. We tweaked our near-term sales and margin expectations after management raised its 2023 guidance. That said, the stock was down nearly 5% in intraday trading. We believe the market may be starting to think the ag cycle is getting close to peaking. We don’t disagree with this sentiment, but there’s still room for sales and earnings growth if we take into consideration the replacement cycle of ag equipment, especially in large ag.