company background image
DE

Deere NYSE:DE Stock Report

Last Price

US$368.16

Market Cap

US$110.6b

7D

7.2%

1Y

-4.1%

Updated

12 Aug, 2022

Data

Company Financials +
DE fundamental analysis
Snowflake Score
Valuation3/6
Future Growth2/6
Past Performance5/6
Financial Health4/6
Dividends3/6

DE Stock Overview

Deere & Company manufactures and distributes various equipment worldwide.

Deere Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Deere
Historical stock prices
Current Share PriceUS$368.16
52 Week HighUS$446.76
52 Week LowUS$283.81
Beta1.11
1 Month Change24.05%
3 Month Change0.40%
1 Year Change-4.13%
3 Year Change146.71%
5 Year Change213.84%
Change since IPO3,420.26%

Recent News & Updates

Aug 10
Calculating The Fair Value Of Deere & Company (NYSE:DE)

Calculating The Fair Value Of Deere & Company (NYSE:DE)

How far off is Deere & Company ( NYSE:DE ) from its intrinsic value? Using the most recent financial data, we'll take a...

Aug 02

Deere & Company makes minority investment in Kenya ag-tech firm

Deere & Company (NYSE:DE) has announced a minority investment in Nairobi, Kenya-based ag-tech company, Hello Tractor. Hello Tractor was among the first group of companies to participate in John Deere's Startup Collaborator program that launched in 2019. The company has developed a farm-equipment-sharing app that enables farmers to track and manage their fleet, book customers, and access financing options. Jason Brantley, Director of Ag & Turf Sales & Marketing – Africa and Asia at John Deere, stated: "John Deere sees this as an opportunity to support Hello Tractor's innovative work to provide technologies and solutions to agricultural entrepreneurs in Africa and Asia. Hello Tractor's work also aligns with the John Deere Strategy and the Ag & Turf Division's Leap Ambitions to ensure 100% of new Small Ag equipment is connectivity-enabled by 2026." Hello Tractor employs ~25 people and will continue to operate from its current location in Africa. DE shares are down ~2% pre-market

Jul 30
If EPS Growth Is Important To You, Deere (NYSE:DE) Presents An Opportunity

If EPS Growth Is Important To You, Deere (NYSE:DE) Presents An Opportunity

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks...

Jul 24

Deere: A Very Favorable Risk/Reward Thanks To Strong Agriculture Fundamentals

In this article, I start by explaining why agriculture fundamentals provide a healthy bull case for Deere, as the world is poised to see long-term elevated crop prices. On top of that, the focus on advanced agriculture technologies is key as the world is running out of arable land while the focus on sustainability fuels precision agriculture demand. While economic challenges persist, Deere is in a terrific position to benefit from a long-term agricultural bull market, which is making the current valuation extremely attractive. Moreover, dividend (growth) investors should expect more (aggressive) buybacks and dividend hikes as free cash flow generation is expected to remain strong. Introduction It's time to talk about Deere & Company (DE). In May, I wrote an article titled "Deere's Bumpy Road To New Highs". Since then, the stock is down roughly 14% as we're indeed on a very bumpy road thanks to various headwinds like slower economic growth expectations, volatile crop and energy prices, as well as an aggressive Federal Reserve eager to damage economic demand in order to control inflation. In this article, I'm going to discuss why I added to Deere as the company is in a good spot to not only benefit from an attractive risk/reward given economic conditions but also because it will have to play a major role in a situation where long-term food supply is barely expected to keep up with demand. It helps that Deere is not only the world's largest producer of agriculture equipment but also focused on next-gen technologies aiming to boost yields. Moreover, I highlight the many benefits this stock brings to the table when it comes to dividend growth investing, which is why I own the stock in the first place. With all of this in mind, let's look at the details! The Agriculture Bull Case The agriculture bull market is something I've covered since early 2020 when I turned bullish after COVID-related lockdowns had done a number on agriculture and energy prices. After these lockdowns, demand for energy came back, restaurants reopened, China started to rebuild its hog herds after the African Swine Fever (on top of building inventories in general), and fertilizers became more expensive. This bull case further accelerated when Russia lowered natural gas exports to Europe in 4Q21 as it was preparing for war. It caused fertilizer production to become unprofitable and both energy and crop prices started to rise. Again, I'm mentioning both energy and agriculture crop prices in the same sentence as crop prices tend to trade just barely above production costs (outside of supply shocks). Production costs are driven by energy. Teucrium Speaking of a supply shock, that's exactly what happened when Russia invaded Ukraine, causing its exports to drop off a cliff while it reduced fertilizer exports. The chart below shows what the market is facing as important supplies of wheat and sunflower seeds are stuck in the country. Bloomberg With that said, on June 29, 2022, the OECD-FAO released its agriculture outlook for the 2022-2031 period. This 363-page-long report provided me with some numbers that I missed in my research. The report mentioned subdued global economic growth expectations of 2.7% per year over the next decade (IMF estimates, and below pre-pandemic levels), which is based on normalizing energy prices after 2022. Moreover, the report expects global food consumption (mainly agricultural commodities) to rise by 1.4% per year over the next ten years. This is mainly driven by population growth. Growth in poorer countries will be partially offset by an aging population in many developed countries. With that said, the report also estimates supply. According to the OECD, global agriculture production is projected to increase by 1.1% per year during the next ten years. According to the OECD: [...] the additional output to be predominantly produced in middle- and low-income countries. The Outlook assumes wider access to inputs as well as increased productivity-enhancing investments in technology, infrastructure, and training as critical drivers of agricultural development. However, a prolonged increase in energy and agricultural input prices (e.g. fertilisers) will raise production costs and may constrain productivity and output growth in the coming years. With these numbers in mind, we're dealing with a situation where supply is incredibly tight. For example, using corn as an example, we're starting to encounter an increasing number of years where demand is coming in higher than supply. CME Group This is what the OECD commented on the need for supply: Investments in raising yields and improved farm management are foreseen to drive growth in global crop production. Assuming continuing progress in plant breeding and a transition to more intensive production systems, yield growth is projected to account for 80% of global crop production growth, cropland expansion for 15%, and increasing cropping intensity for 5%. In a world where agricultural (arable) land (per capita) has rapidly fallen, there's not a lot of room to expand agriculture production beyond focusing on yield. OurWorldInData On top of that, and with a focus on shorter-term developments, JPMorgan is becoming bullish again on agriculture commodities. In a recent report, the bank said that: Global grain markets appear immensely oversold. During the past few months, both corn and wheat - to name two key crops - have lost roughly a third of their value. The reason is lower energy prices, which lowers production costs and ethanol demand (corn is a key "energy" commodity as well), as well as good news from Ukraine as there appears to be a trade deal with Russia. The problem is that exports won't be higher than 10 million tonnes of wheat and 5 million tonnes of corn. It's a start, but investors have more or less priced in a free pass for export ships. Both wheat and corn are now below the levels when Russian tanks entered Ukraine earlier this year. Trading View (Black = Corn, Orange = Wheat) Moreover, Russia bombed the port of Odesa (the most important port for agriculture exports in Ukraine), which destroys any credibility this export deal has. Adding to that, fertilizer markets are set to remain tight as I explained in a recent article, which will keep tremendous pressure on agriculture supply for at least another 1-2 years. The Market Is Punishing Deere I own a lot of industrial stocks. In some cases, this comes with a lot of volatility. For example, Deere quickly lost roughly 30% of its market cap after working its way towards $450 per share earlier this year. In 2021, Deere briefly was my largest dividend growth position. This has now changed, and I'm thrilled as I get to buy more at better prices. As the chart below shows, agricultural weakness has provided a fertile ground for sellers. While Deere started to fall faster when corn was still strong, we're dealing with a situation where the market as a whole has priced in lower long-term prices. For example, the December 2023 corn contract is trading at $5.4 per bushel. Down from $6.7 in 1Q22. TradingView (Black = DE, Blue = Corn) Adding to that, Deere remains an industrial player with non-farming exposure. Its largest segment, production agriculture, which is homes to its combines, large tractors, and planters, accounted for 37% of 2021 sales. Total agriculture accounted for 57% of total sales. Construction is bigger than some may believe given what Deere is mostly known for. Deere & Company While I mainly focus on agriculture, construction/road building have become terrific segments as well. In the past, Deere has expanded via acquisitions like the German Wirtgen Group, which not only significantly expanded its non-farming footprint but also its geographic focus. What I'm getting at here is that Deere is highly correlated to leading economic indicators. Deere is currently 25% below its all-time high, which marks the worst sell-off (on a monthly closing price basis) since the Great Financial Crisis. In this case, the stock fell in lockstep with indicators like the Empire State and Philadelphia Fed manufacturing indices. Author While the Empire State index rebounded a bit in July, this is what the Philadelphia Fed index looks like. Both current activity and future activities have plummeted. Federal Reserve Bank of Philadelphia Hence, it's no surprise that investors like large funds have "de-risked" their portfolios. It's often simply math based on stock characteristics instead of long-term company fundamentals. That's why I'm not worried at all. If anything, this once again offers new opportunities. New Investor Opportunities I'm not making the case that weakness isn't justified. Deere is in a challenging environment. For example, in 2Q22, the company got a $627 million production cost headwind in its large agriculture segment. This more than wiped out $564 million in pricing and currency tailwinds. In small agriculture and turf, higher production costs of $330 million more than offset pricing gains of $277 million causing operating profit to drop from $648 million to $520 million despite 5% higher net sales. The construction and forestry segment was stronger as net sales soared 9%, providing outperforming pricing gains, which boosted operating income from $489 million to $814 million. Overall, investors hated these numbers. Again, it makes sense as reporting higher sales in agriculture but suffering from lower margins feels like a "waste of time". However, demand is strong, and supply chain issues are expected to ease going into next year. This is what the company mentioned with regard to demand: Given the strong fundamentals in agriculture, coupled with the underlying supply constraints, we do not see the industry being able to meet all of the demand that exists in 2022. While difficult to quantify exactly the impact of this, we expect 2023 to be another strong year of industry demand. Hence, I like to focus on the longer-term - the big picture. This year, the company is still expected to do $10.5 billion in EBITDA followed by more than $11.6 billion in EBITDA in both FY2023 and FY2024. Free cash flow is expected to average roughly $7.0 billion in these years. TIKR.com To put things into perspective, this implies a 7.3% free cash flow yield using the company's $95.4 billion market cap. While we're working with implied numbers here, it would suggest the highest free cash flow yield since the Great Financial Recession. In other words, even if expectations come down, the risk/reward is actually good this close to $300 per share. Data by YCharts What matters as well is that Deere is now offering a somewhat decent yield again. After raising its quarterly dividend by 7.6% on May 25, the company is now offering a $1.13 quarterly dividend. That's $4.52 per year or 1.4% of the current stock price. Data by YCharts While 1.4% isn't an eye-catcher for many yield-seeking investors, it's a decent number and fueled by the company's focus on long-term dividend growth and financial health. Seeking Alpha In other words, not only are we dealing with a >7% implied free cash flow yield that indicates both dividend safety and a lot of room to grow payout, we're also dealing with a company that is expected to lower net debt to $30.8 billion next year, lowering the leverage ratio to 2.6x. Note that the company had a rather high leverage ratio of consistently more than 6x EBITDA in the years prior to the pandemic when low crop prices and somewhat slow growth put pressure on the company's balance sheet. Over the past 10 years, the dividend has been raised by 146%. The company also bought back 23% of all shares outstanding, providing the company with the chance to achieve a 411% total return. This beats the S&P 500 by a wide margin. Data by YCharts Moreover, this isn't unique. Combining all business cycles since 1985, Deere has returned 14.5% per year, outperforming the S&P 500 by 400 basis points. Although the standard deviation is much higher than the S&P 500 standard deviation, Deere was able to keep up on a volatility-adjusted basis as well (Sharpe/Sortino ratio). Portfolio Visualizer With that said, it helps that the implied FCF yield isn't the only indicator saying that Deere is undervalued.

Jul 19
Returns On Capital Are Showing Encouraging Signs At Deere (NYSE:DE)

Returns On Capital Are Showing Encouraging Signs At Deere (NYSE:DE)

What trends should we look for it we want to identify stocks that can multiply in value over the long term? In a...

Shareholder Returns

DEUS MachineryUS Market
7D7.2%3.4%1.3%
1Y-4.1%-12.3%-11.7%

Return vs Industry: DE exceeded the US Machinery industry which returned -12.3% over the past year.

Return vs Market: DE exceeded the US Market which returned -11.7% over the past year.

Price Volatility

Is DE's price volatile compared to industry and market?
DE volatility
DE Average Weekly Movement7.0%
Machinery Industry Average Movement6.0%
Market Average Movement7.8%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: DE is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: DE's weekly volatility (7%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
183775,550John Mayhttps://www.deere.com

Deere & Company manufactures and distributes various equipment worldwide. The company operates through four segments: Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services. The Production and Precision Agriculture segment provides mid-size tractors, combines, cotton pickers and strippers, sugarcane harvesters, harvesting front-end equipment, sugarcane loaders, pull-behind scrapers, and tillage and seeding equipment, as well as application equipment, including sprayers and nutrient management, and soil preparation machinery for grain growers.

Deere Fundamentals Summary

How do Deere's earnings and revenue compare to its market cap?
DE fundamental statistics
Market CapUS$110.62b
Earnings (TTM)US$5.95b
Revenue (TTM)US$45.73b

18.9x

P/E Ratio

2.5x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
DE income statement (TTM)
RevenueUS$45.73b
Cost of RevenueUS$30.92b
Gross ProfitUS$12.21b
Other ExpensesUS$6.25b
EarningsUS$5.95b

Last Reported Earnings

May 01, 2022

Next Earnings Date

Aug 19, 2022

Earnings per share (EPS)19.47
Gross Margin26.69%
Net Profit Margin13.01%
Debt/Equity Ratio260.5%

How did DE perform over the long term?

See historical performance and comparison

Dividends

1.2%

Current Dividend Yield

21%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is DE undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for DE?

Other financial metrics that can be useful for relative valuation.

DE key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue3.4x
Enterprise Value/EBITDA17.7x
PEG Ratio5.9x

Price to Earnings Ratio vs Peers

How does DE's PE Ratio compare to its peers?

DE PE Ratio vs Peers
The above table shows the PE ratio for DE vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average15.5x
CNHI CNH Industrial
10.1x3.5%US$17.7b
TTC Toro
26.6x13.5%US$9.5b
AGCO AGCO
10.6x8.0%US$8.4b
CAT Caterpillar
15.4x7.3%US$103.9b
DE Deere
18.9x3.2%US$112.5b

Price-To-Earnings vs Peers: DE is expensive based on its Price-To-Earnings Ratio (18.9x) compared to the peer average (15.7x).


Price to Earnings Ratio vs Industry

How does DE's PE Ratio compare vs other companies in the US Machinery Industry?

Price-To-Earnings vs Industry: DE is good value based on its Price-To-Earnings Ratio (18.9x) compared to the US Machinery industry average (22.6x)


Price to Earnings Ratio vs Fair Ratio

What is DE's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

DE PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio18.9x
Fair PE Ratio25.5x

Price-To-Earnings vs Fair Ratio: DE is good value based on its Price-To-Earnings Ratio (18.9x) compared to the estimated Fair Price-To-Earnings Ratio (25.6x).


Share Price vs Fair Value

What is the Fair Price of DE when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: DE ($368.16) is trading above our estimate of fair value ($367.49)

Significantly Below Fair Value: DE is trading above our estimate of fair value.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.


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Future Growth

How is Deere forecast to perform in the next 1 to 3 years based on estimates from 17 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


3.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: DE's forecast earnings growth (3.2% per year) is above the savings rate (1.9%).

Earnings vs Market: DE's earnings (3.2% per year) are forecast to grow slower than the US market (14.4% per year).

High Growth Earnings: DE's earnings are forecast to grow, but not significantly.

Revenue vs Market: DE's revenue (4.5% per year) is forecast to grow slower than the US market (7.9% per year).

High Growth Revenue: DE's revenue (4.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: DE's Return on Equity is forecast to be high in 3 years time (28%)


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Past Performance

How has Deere performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


24.3%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: DE has high quality earnings.

Growing Profit Margin: DE's current net profit margins (13%) are higher than last year (11.5%).


Past Earnings Growth Analysis

Earnings Trend: DE's earnings have grown significantly by 24.3% per year over the past 5 years.

Accelerating Growth: DE's earnings growth over the past year (30.2%) exceeds its 5-year average (24.3% per year).

Earnings vs Industry: DE earnings growth over the past year (30.2%) exceeded the Machinery industry 9.3%.


Return on Equity

High ROE: Whilst DE's Return on Equity (31.32%) is high, this metric is skewed due to their high level of debt.


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Financial Health

How is Deere's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: DE's short term assets ($60.3B) exceed its short term liabilities ($29.1B).

Long Term Liabilities: DE's short term assets ($60.3B) exceed its long term liabilities ($36.0B).


Debt to Equity History and Analysis

Debt Level: DE's net debt to equity ratio (243.8%) is considered high.

Reducing Debt: DE's debt to equity ratio has reduced from 460.3% to 260.5% over the past 5 years.

Debt Coverage: DE's debt is not well covered by operating cash flow (8.4%).

Interest Coverage: DE's interest payments on its debt are well covered by EBIT (33.1x coverage).


Balance Sheet


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Dividend

What is Deere current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


1.23%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: DE's dividend (1.23%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.49%).

High Dividend: DE's dividend (1.23%) is low compared to the top 25% of dividend payers in the US market (4%).


Stability and Growth of Payments

Stable Dividend: DE's dividends per share have been stable in the past 10 years.

Growing Dividend: DE's dividend payments have increased over the past 10 years.


Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (21%), DE's dividend payments are well covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: With its high cash payout ratio (103.7%), DE's dividend payments are not well covered by cash flows.


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Management

How experienced are the management team and are they aligned to shareholders interests?

3.0yrs

Average management tenure


CEO

John May (53 yo)

2.75yrs

Tenure

US$19,912,826

Compensation

Mr. John C. May II is Chairman of the Board of Directors and Chief Executive Officer of Deere & Company. He is responsible for leading a team of more than 75,000 employees in 30+ countries across the globe...


CEO Compensation Analysis

Compensation vs Market: John's total compensation ($USD19.91M) is above average for companies of similar size in the US market ($USD12.88M).

Compensation vs Earnings: John's compensation has increased by more than 20% in the past year.


Leadership Team

Experienced Management: DE's management team is considered experienced (3 years average tenure).


Board Members

Experienced Board: DE's board of directors are considered experienced (6.7 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Deere & Company's employee growth, exchange listings and data sources


Key Information

  • Name: Deere & Company
  • Ticker: DE
  • Exchange: NYSE
  • Founded: 1837
  • Industry: Agricultural and Farm Machinery
  • Sector: Capital Goods
  • Implied Market Cap: US$110.616b
  • Shares outstanding: 305.64m
  • Website: https://www.deere.com

Number of Employees


Location

  • Deere & Company
  • One John Deere Place
  • Moline
  • Illinois
  • 61265
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/12 00:00
End of Day Share Price2022/08/12 00:00
Earnings2022/05/01
Annual Earnings2021/10/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.