The US earnings season is still ongoing, and with upside surprises like the agricultural machinery and tractor company Deere, we might see some interest in the financial markets.
Despite the US Fed’s approach to curbing inflation with rising interest rates, the Industrial Index (XLI) has been holding up nicely, and so has Deere & Company’s share price.
Technicals
A broader continuation triangle pattern can be seen as the price action broke through the $393.93 resistance level, retested this significant level, and moved higher. The premarket price is gapping higher from current price levels, and a gap-and-go scenario exists toward the all-time high of $446 a share. If the gap closes, we could expect the major breakout zone at $393.93 to be retested before another leg higher, which should give long-term investors better entry points.
Fundamentals
Deere and Company posted better-than-expected quarterly profits, as eased supply constraints and higher crop prices kept the farming community upgrading their machinery. The famous tractor company’s Q4 earnings report showed earnings per share increased to $7.44 from $4.12 a year earlier, with revenue up nearly 40% year-over-year. Deere mentioned in the statement that increased shipments across all segments and higher prices offset higher production costs and a stronger greenback.
The company’s forward guidance also impressed, sending shares higher in the premarket as an increase in earnings of $8.5 billion, vs. $7.13 billion this year, is expected in 2023.
Summary
Long-term investors holding Deere & Company could see higher prices back to all-time highs if the price action moves higher from current levels. New and current Deere investors could find lower entry levels if economic events damper the economic outlook, which could see prices back at the $393.93 support level.
Sources: Deere & Company, TradingView, Reuters
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