With agricultural stocks on the rise, farming equipment manufacturer Deere & Company is at the forefront of the charge after beating fourth-quarter estimates. The company was briefed on the first-quarter earnings of 2022 by CEO John May in February, and the outlook for fiscal 2022 looked promising. However, Deere shares are currently trading well below the US industry standard for farming machinery after sliding over 5% on February 7th when the effect of the war in Ukraine started to stifle S&P 500 stocks. As prices continue to be held down by supply chain difficulties and general volatility, it appears an opportunity may be opening to acquire Deere & Company stock at its lowest price in two years.
The ‘Tesla Of Farming’ Growing Steadily
There are so many metrics that make Deere appear to be a good buy regardless of whether the trader is looking for a mid or long-term investment. The company that developed the world’s first AI-powered tractors earned itself the nickname the ‘Tesla of Farming’ due to boasting industry-leading tech and comparable performance and stability to Musk’s powerhouse of a company. Over five years, DE shares gained 31% year on year, while the S&P500 only managed to pull off just under 18%.
Well-Priced DE Stock Price
Deere & Company was trading with a Price-to-Earnings Ratio of 20.46 on February 8th as opposed to the machinery industry average of 69.64 as of January 2022. Even though DE stock has skyrocketed 184% since March 2020, there is still ample room for growth, and shares are presently trading ultra-low. The price was also edged down even more to a slight degree by Deere officially closing its sales departments and offices in Ukraine. Russian operations are still running but in accordance with sanctions.
John Deere Geared For Tech-Focused Year
CEO May reminded shareholders that the company had launched a new smart industrial strategy that involved the reorganisation of business toward customer-centric solutions known as production systems while also changing up capital allocation for 2022. Several unprofitable business agreements have been exited, and the company is re-aligned to a centralised technology stack. Many investors consider DE a severely underrated AI stock, and we feel they may be right. One of the primary income sources for Deere is the Precision Ag agricultural automation software package that allows farmers to optimise their operations using artificial intelligence combined with external market knowledge. This technology alone is expected to grow by 20-25% in 2022.
Deere & Company Suprises The World With Autonomous Tractor
Additionally, this year will be a big one for John Deere, who unveiled a driverless fully autonomous tractor at CES 2022. Ready for wide-scale production, the autonomous tractor is driven by a deep neural network that parses data from six stereo cameras with 360° obstacle detection. The pioneering 8R tractor may have just launched, but already, Deere ensures us that there will be more than ten but fewer than 50 fully autonomous tractors working commercial crops during the year. There is also the exciting Startup Collaborator Program which is working on everything from View AR augmented reality to SeeDevice advanced imaging for farming and more. 2022 May bring a few surprises.
High Estimates And Potentially Undervalued DE Shares
Deere’s industry-leading AI and engineering are only just getting started, but innovations are already rocking the world of farming machinery. Deere has full order books for the year thanks to demand outpacing supply for the second year in a row despite the rebound of manufacturing and general industry. Yet, the Illinois-based corporation maintains that it has left ample room in manufacturing quotas for dynamic pricing as well. The average price target out of 22 analyst opinions is $424.05, or just 12.9% away from the trading price of $369 on March 8th, with a low estimate of $280 and a high of $487. DE stock has grown 7.59% year-to-date but has been in a slump for over five weeks. A technical analysis reveals an RSI reading of 28.16 at the time of writing, which shows that DE is currently undervalued and potentially a good buy or a stock for traders to watch to time an even lower entry point.
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