While most investors are focused on the first new 52-week high in the NASDAQ in more than a year, I’m studying John Deere’s (DE) just released earnings report. You can see in the tweet above that the previous four times the NASDAQ has made a new 52-week high after more than one year returns have been stellar a year later. But it doesn’t really mean anything. Every market moment is unique.
What does mean something is that DE has raised its full year net income guidance in each of the last two quarters. Six months ago they said they’d make between $8.0 billion and $8.5 billion. Three months ago they increased that to $8.75 billion to $9.25 billion. And now they think it will be between $9.25 billion and $9.5 billion. Whether investors care to take notice at the moment is not a big concern of mine because at some point they will.
In the quarter ended April 30, 2023, DE revenue was +30% resulting in a 42% increase in EPS. If you divide the midpoint of the net income guidance by the diluted share count, DE now expects to earn nearly $32/share this fiscal year. Divide the current stock price by that and you get a PE of 12. So I’m happy to see that DE is taking advantage of its extremely undervalued stock by buying back $2.5 billion in shares over the last 6 months. DE shares are up more than 3% at the open.