Shares of Deere & Company (NYSE: DE) are trading lower by as much as 4.8% during Friday's trading session, a reaction that opens up a vast disconnect between the company's second quarter 2023 earnings results and the current valuation.

This name enjoys an underlying industry push benefitting other similar words in the space as the machinery (especially farming and construction-focused) niches ride on rising demand. However, there are some fears of slowing orders in farming now that grain prices are normalizing.

When it comes to Deere, management has raised future guidance and outlooks despite the doubts surrounding potential demand in the space; perhaps investors have the chance to shrug the worries off and still consider a potential purchase for a breakout in the stock.

Still Rocking 

Within management's presentation, investors can note a few significant developments that can increase their confidence levels in this name. Leading with a net sales increase of 12%, which not only beats the rampant inflation rates experienced in the U.S. economy during 2022, these advances are all the more impressive considering the company's massive size.

Growing double-digit sales is hard to accomplish when market capitalizations cross the $100 billion mark, one which Deere crossed long ago. Money likes growth, of course, and most smart money is still asleep behind the wheel, waiting for a "buy now" wake-up call.

Even more impressive, and where investors can begin to celebrate louder, is the 66% annual jump in diluted earnings per share. Considering that the stock has only risen by 8.9% during the same period, investors are witnessing another wide discrepancy between price action and financial performance.

Management expects further double-digit growth figures for the second half of 2023. However, margins should expand further and boost earnings jumps for investors. Bears shouting about an industry slowdown may be dumbfounded by these outlooks.

Words are hard to measure, especially when management and insiders get a chance at the podium; dollars and cents are more of a tangible message sent from within. In the case of Deere, the scale would show $4.6 billion, reflecting the amount of capital allocated toward share repurchases.

Buying back as many as 13.6 million shares from the open market will tell investors two things: First, management is confident in their ability to achieve the provided growth outlooks, and second; insiders themselves believe the stock to be relatively cheap enough to buy in bulk.

Despite not providing a solid dollar figure, Deere management also mentioned a rise in advance-order bookings. These positive points quickly make the slowdown threats go up in smoke, opening up the way for investors to gain potential exposure to the new upside.

Cheap Enough?

Management teams are not the only ones seeing double-digit upside potential in the stock's future; Deere analyst ratings point toward a 15.3% consensus upside from today's prices. However, these targets may need to be revised after analysts factor in the results from the past quarter.

Comparing Deere stock to other industry giants like Caterpillar (NYSE: CAT) can aid investors in a more educated decision. The same fear wave has hit this stock, as its latest quarterly results hint at a potentially overextended infrastructure market.

However, Deere's product mix and business model expose the stock to different business cycles, and analysts rightly point this out via their respective price targets. Conversely to Deere, Caterpillar analyst ratings see a net downside of 2.1%; the question now becomes whether the broader market is on board with this view.

Deere's valuation metrics will close the loop for investors still on the fence about these farming cycle fears, as the stock can be picked up for a price-to-earnings ratio of 14x. This ratio is lower than the broader S&P 500 and cheaper than Caterpillar's 17.1x.

These relative metrics are now being exacerbated by the near double-digit selloff today. There is an underlying push from valuations and financials coming to the stock in the coming months, creating an opportunity to catch up on its underperformance to Caterpillar.

Deere needs to rise by as much as 32% to play catch up to close its performance gap with Caterpillar stock. Is this feasible? Management is buying the stock and pointing toward rising demand in order books and double-digit jumps to be reported in the second half of 2023.