What Happened:
Shares of agricultural and construction machinery company Deere (NYSE:DE) jumped 6.7% in the morning session after the company reported second quarter earnings results, with revenue and EPS exceeding Wall Street's expectations. Gross margin also improved significantly during the quarter and free cash flow came in positive.
On the other hand, the company called out "challenging conditions in the global agricultural and construction sectors" and lowered its full year outlook further for the Construction and Forestry industry. Zooming out, we think this was a mixed but decent quarter for the company.
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What is the market telling us:
Deere’s shares are not very volatile than the market average and over the last year have had only 2 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
Deere is down 6.7% since the beginning of the year, and at $374.24 per share it is trading 13.3% below its 52-week high of $431.68 from August 2023. Investors who bought $1,000 worth of Deere’s shares 5 years ago would now be looking at an investment worth $2,604.
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