Deere (DE) reported record second quarter earnings before the bell Wednesday. Given its earnings power, sales growth and outlook; the company looks like a solid buy after a 10% plunge over the last couple of weeks in the overall market downturn.
Key Highlights from the earnings report for Deere.
- Earnings rose 23% Y/Y to $2.61 a share.
- Revenues increased a healthy 12% to just over $10B for the quarter.
- The company boosted its full year earnings forecast to $3.35B
- Deere also said it expected equipment sales to now rise 15% for FY2012 and for a 25% improvement in the third quarter.
4 additional reasons Deere will reward investors from $76 a share:
- The stock now trades for 9 times forward earnings, a deep discount to its five year average (14.8). It also has a five year projected PEG of under 1 (.91)
- The company now has beat earnings estimates for 13 straight quarters and consensus earnings estimates for FY2012 and FY2013 had already moved up over the past three months prior to this earnings report.
- Deere has an A rated balance sheet, sells for less than 1 times sales and provides a dividend of 2.3%.
- S&P has a "Buy" rating and a $111 price target on DE. The median analysts' price target on Deere by the 17 analysts that cover the stock is $94 a share.
Disclosure: I am long DE.