Is Now An Opportune Moment To Examine Deere & Company (NYSE:DE)?

Deere & Company (NYSE:DE) saw significant share price movement during recent months on the NYSE, rising to highs of US$446 and falling to the lows of US$364. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Deere's current trading price of US$400 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Deere’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Deere

Is Deere Still Cheap?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 3.7% below my intrinsic value, which means if you buy Deere today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $415.17, then there isn’t much room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Deere’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Deere look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -9.3% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Deere. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Currently, DE appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on DE for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on DE should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing Deere at this point in time. While conducting our analysis, we found that Deere has 2 warning signs and it would be unwise to ignore them.

If you are no longer interested in Deere, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.