Deere & Company (NYSE:DE) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$414 at one point, and dropping to the lows of US$361. 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$375 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.
Check out our latest analysis for Deere
What Is Deere Worth?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 4.52% above our intrinsic value, which means if you buy Deere today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $358.55, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Deere’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
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. Though in the case of Deere, it is expected to deliver a highly negative earnings growth in the next few years, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
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 advantageous 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.
If you'd like to know more about Deere as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 2 warning signs for Deere and we think they deserve your attention.
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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.
About NYSE:DE
Deere
Engages in the manufacture and distribution of various equipment worldwide.
Established dividend payer and good value.
