uploads/2018/03/Part-4-Deere-short-interest-2Q18-dvd-1.png

What Deere’s Latest Short Interest Data Suggests

By

Updated

Deere’s short interest

Based on the latest short interest report on March 1, 2018, Deere’s (DE) short interest has fallen since the beginning of 2018. However, it has risen marginally since the previous report. The decline in short interest indicates that bearishness in the stock has reduced.

DE’s short interest as a percentage of its outstanding shares fell from 2.8% on December 28, 2017, to 2.5% on March 1, 2018. DE’s stock price fell 2.0%.

Article continues below advertisement

Why has DE’s short interest declined?

Deere reported strong fiscal 1Q18 earnings and beat analysts’ estimates. It reported adjusted earnings per share of $1.31, marking a whopping increase of 11.3% YoY (year-over-year). DE reported total revenue of $6.9 billion, an increase of 23% YoY, driven by the acquisition of Wirtgen Group. DE also revised its adjusted net income guidance upward to $2.9 billion in fiscal 2018 from $2.6 billion. Also, Deere has continued its acquisition strategy by acquiring King Agro, a specialist in carbon-fiber technology products. Thanks to these positive developments, DE’s overall short interest has declined.

Peer comparison

DE’s short interest is ~8 million shares, and its average trading volume is ~2.5 million shares. As a result, its interest ratio is 3.2x, which indicates that it would take three days to cover all short positions in DE. DE’s peers’ short interest data is as follows:

  • Caterpillar’ (CAT) short interest is ~10.0 million shares, with an average number of shares traded of 5.9 million—its short interest ratio is ~1.7x, indicating that it would take almost two days to cover its short positions
  • AGCO’s (AGCO) short interest ratio is 4.8x, meaning it would take five days to cover its short positions
  • CNH Industrials’ (CNHI) short interest data was not available

Investors can indirectly hold DE through the VanEck Vectors Agribusiness ETF (MOO), which had invested 8.2% of its portfolio in Deere as of March 21, 2018.

Advertisement

More From Market Realist