Should Investors Reassess John Deere After Recent Five Year Gains of 128%?

If you’re wondering what to do with Deere shares after their recent stretch, you’re not alone. Whether you already own the stock or are eyeing it for your next portfolio move, the numbers do catch your attention. Deere has seen a modest uptick over the last week at 0.6%, despite a 4.9% drop over the last month. But if you zoom out, the longer-term performance is striking: up 12.8% year-to-date, 16.4% over the past year, and an impressive 127.7% in five years. Those statistics reflect a business that has managed to stay relevant and resilient, even as market moods and risk appetite have shifted.

Recent gains align with broader optimism in industrial and agricultural equipment as demand for advanced machinery picks up across global markets. Moves in the stock may also reflect how investors are reassessing risk, especially with attention turning toward companies that weather economic cycles well. Still, valuation matters, and that's what brings us here. Deere's value score currently sits at 4 out of a possible 6, which suggests it's undervalued in two-thirds of key measures our analysis tracks.

So how does a value score of 4 stack up, and what does it really mean for your investment thesis? Next, we’ll walk through the valuation checks that back up Deere’s rating across the most common methods used by analysts. But stick around, we’ll also cover a unique approach that can give you an even deeper read on whether Deere is truly trading below its worth.

Deere delivered 16.4% returns over the last year. See how this stacks up to the rest of the Machinery industry.

Approach 1: Deere Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates what a business is worth today based on projections of future free cash flows, which are discounted back to the present to account for the time value of money. This approach gives investors a sense of a company’s intrinsic value that does not rely on current market trends.

For Deere, the most recent twelve months saw Free Cash Flow of $4.83 billion. Analyst estimates expect this figure to more than double over the next five years, reaching as high as $12.04 billion by 2029. While specific analyst forecasts stop after 2029, projections continue by extrapolating growth trends out to 2035. This extended outlook uses a 2 Stage Free Cash Flow to Equity model, providing a robust estimate of the company’s long-term earning potential in dollars.

According to this model, Deere’s intrinsic value is $838.77 per share. When compared to the current share price, the DCF calculation suggests Deere is about 43.8% undervalued, indicating significant upside potential based on projected cash flows.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Deere.

Our Discounted Cash Flow (DCF) analysis suggests Deere is undervalued by 43.8%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Deere Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is a well-established metric for valuing profitable companies like Deere as it compares a company’s share price to its per-share earnings. It is popular because it provides investors with a quick sense of how much they are paying for each dollar of profits generated by the business.

However, what qualifies as a “normal” or “fair” PE ratio depends heavily on growth expectations and perceived business risks. Companies with stronger growth prospects or lower risks typically command higher PE ratios because investors are willing to pay more for future earnings.

Deere currently trades at a PE ratio of 24.5x, which is almost identical to the Machinery industry average of 24.4x, but noticeably below the peer group average of 35.4x. At first glance, this suggests Deere looks attractively valued compared to similar companies.

Simply Wall St’s proprietary “Fair Ratio” model takes this a step further by weighing factors like Deere’s earnings growth, its industry, profit margins, market capitalization, and risk profile. These are areas that basic industry or peer comparisons often overlook. Deere’s Fair Ratio stands at 33.4x, well above its current PE ratio, highlighting deeper value when growth and quality are considered.

Because Deere’s actual PE is meaningfully lower than both the peer average and Fair Ratio, analysis suggests the stock is undervalued using this earnings-based lens.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Deere Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your story about a company’s future, combining what you believe about its growth, profitability, and risks with a set of numbers, and your own view of fair value and future estimates.

Narratives allow you to connect Deere’s business story, such as global opportunities in precision agriculture or resilience during downturns, directly to a financial forecast and a fair value. This makes investment decisions both clearer and more personal.

Anyone can create, view, or follow Narratives right on Simply Wall St’s Community page, which millions already use. With just a few clicks, you can see how different investor perspectives impact the fair value and compare it instantly to today’s share price to help decide whether to buy, hold, or sell.

Because Narratives update automatically when new information, like earnings results or major news, comes in, you always have the most relevant view for your investment thinking.

For example, one investor’s Narrative for Deere might highlight strong automation growth and set a fair value above $720, while a more cautious user, worried about tariffs and pricing pressures, could see fair value closer to $460. This proves your investment story really does matter.

Do you think there's more to the story for Deere? Create your own Narrative to let the Community know!

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.

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