Throughout the presidential campaign trail, then-real estate mogul and reality TV celebrity Donald Trump lavished praise on Deere & Company (NYSE:DE). And I don’t think we can underestimate how important Trump has been for DE stock holders.

Deere is the quintessential “Trump stock,” meaning it’s American, manufactures products in America and competes against the Japanese.

Aside from Caterpillar (NYSE:CAT), Harley-Davidson (NYSE:HOG), and whatever company makes those “MAGA” hats, few organizations lever conservative street cred like Deere.

Indeed, during President Trump’s first year in office, DE stock skyrocketed at an unbelievable rate. For 2017, shares gained nearly 54%. Even more impressive, this performance followed 2016’s robust return of nearly 40%. Interesting to note, DE jumped significantly in mid-November of that year, a few days after Trump became President-elect.

But it’s not just Trump talking up Deere that led to a resurgence in DE stock. The president has consistently upheld his “America First” message. This has meant promising “consequences” for companies taking their businesses abroad.

On a more positive scope, America First also means increased manufacturing for domestic projects, such as the U.S.-Mexico wall. In addition, Trump this year signed a $1.3 trillion spending bill for the military. It’s the largest military budget in history, and reflects the President’s commitment to lead through strength.

All these developments potentially bolster DE stock, with the underlying company having exposure to civilian, government and military sectors.

Unfortunately, while last year’s results suggested another promising year in 2018, it hasn’t happened. Prior to its third-quarter earnings report, DE stock was down 11.5% year-to-date. Can Deere recover, or should investors look for greener pastures?

Deere Generates Strong Growth but Leaves Questions

Heading into the Q3 report, Deere enjoyed a long string of earnings success. Since Q1 2015, the company beat all profitability expectations, except in the last Q2 report. Therefore, it was critical for Deere to right the ship. Regrettably, investors didn’t quite receive a solid feel from this latest showing.

For Q3, consensus estimates pegged earnings per share at $2.75. This was near the higher end of individual forecasts, which ranged between $2.53 and $2.90. The actual figure, though, was a disappointingly mixed $2.59, or a nearly 6% negative earnings surprise.

Investors obviously didn’t care for the fact that this is now two consecutive misses against EPS consensus targets. Furthermore, the magnitude isn’t insignificant. In the prior Q2 report, Deere produced a $3.14 EPS against a $3.31 consensus forecast. Yet, despite its EPS miss in Q3, Deere’s per-share earnings results represent a 31% lift year-over-year.

Also a positive was revenue growth. Against a consensus estimate that called for $9.21 billion, the company rang up $9.29 billion, or nearly a 1% surprise. This haul was also right near the top end of individual estimates, which ranged between $9.1 billion and $9.3 billion. In the year-ago quarter, Deere delivered revenue of $6.8 billion.

The company saw growth across multiple businesses. That said, a particular highlight was its agricultural and turf unit, which contributed $6.29 billion in sales.

Under ordinary circumstances, investors may have taken the strong revenue figures as an affirmation of DE stock. But due to the geopolitical backdrop, the markets sold off shares quickly. Before the opening bell, shares dropped 4% before climbing back up.

Currently, the Trump administration has multi-billion dollar tariffs against China, Europe, and Mexico. The two nations and the European Union have retaliated in kind.

DE Stock a Victim of Irony

The best way to explain DE stock over the trailing two years is that it’s a victim of irony. President Trump’s focus and reaffirmation of the American economic machinery boosted DE and its compatriots. However, it’s this same America First approach that has put off the markets recently.

Trump loves America, and he wants to see his country win gold across every economic metric. From a perspective of personal pride, I get it. However, we must be realistic: We’ll never achieve this goal.

Simply put, the markets are agnostic. They don’t care about anything but the bottom line. Due to realities such as economies of scale, some nations are better equipped for specific output. We can’t win all battles.

Certainly, we can’t afford to make too many enemies with our patriotic fervor. Deere is a great company, no doubt about it. But they can’t survive based on North American sales alone.

This point is further driven home due to possible headwinds impacting housing starts. While we’ve seen strong numbers in this sector for much of 2018, recently, housing starts have dipped.

The decline could be an anomaly, or it could be a sign of something more serious. If the latter, we definitely can’t afford an overly-aggressive foreign policy. However, I don’t see the Trump administration backing down, which presents risks for DE stock.

Still, against a tough backdrop, Deere managed outstanding revenue growth. I don’t think you should overlook that. As a result, I’m cautiously optimistic on DE stock.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.