DE  Deere & Company

Exchange

NYSE

Sector

Capital Goods

Industry

Industrial Machinery/Components

Market Cap.

34.12B

Vuru Grade

50.87/100

Current Price

$107.73
-1.92 (-1.75%)

Growth Price

$115.59
Undervalued by 7.30%

Company Metrics

  • P/E 23.34
  • P/S 1.30
  • P/B 5.09
  • EPS 4.62
  • Cash ROIC 2.81%
  • Cash Ratio 0.25
  • Dividend 2.40 / 2.19 %
  • Avg. Vol. 2.86M
  • Shares 316.72M
  • Market Cap. 34.12B

Company Description

Deere & Company provides products and services primarily for agriculture and forestry worldwide. The company operates in three segments: Agriculture and Turf, Construction and Forestry, and Credit. The Agriculture and Turf segment manufactures and distributes a line of farm and turf equipment, and related service parts, which include large, medium, and utility tractors; loaders; combines, cotton, ... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Deere & Co. optimistic about this year's outlook
KWQC-TV6 - Feb 23, 2017
MOLINE, Ill. (KWQC) - John Deere stockholders are optimistic about the future after the meeting they had at Deere and Company World Headquarters Wednesday. While 2016 was another trying year for the company, CEO Sam Allen says he's seeing the ...
Deere CEO says company will keep headquarters in Quad Cities - Chicago Tribune
CEO Sam Allen Confident in Deere & Co. Ability to Perform Through Thick & Thin - WVIK
Will Deere & Company Raise Its Dividend In 2017?
Seeking Alpha - Feb 21, 2017
This is not an easy time for Deere & Company (NYSE:DE). The company operates in a cyclical industry, which is currently stuck in a downturn.
Jefferies Just Issued “Hold” Rating on Deere & Company (DE) - Highland Mirror
Deere & Company (DE) Moves Higher on Volume Spike for February 22 - Equities.com
Why Chasing Deere & Company's Stock in 2017 Could Be Risky
Motley Fool - Feb 16, 2017
You wouldn't normally associate Deere & Company (NYSE:DE) with commodities, but a slump in prices of agricultural crops like corn and soybean can severely dent the farm equipment giant's sales and profits as we've seen in recent years.
Deere & Company (DE) Moves Lower on Volume Spike for February 14 - Equities.com
Deere & Company (DE) Shares Soar to All-Time High, What About Dividends? - Economic Calendar
Deere & Company: Sell Now As Headwinds Are Here To Stay
Seeking Alpha - Feb 17, 2017
The industry bottom is close, but given equipment purchase activity, the recovery will be weak. Given lower efficiency, we can forecast that Deere will be less profitable in the future. Debt refinancing will cause interest expenses to materially ...
Agriculture market is 'nearing bottom,' Deere says - CNBC
Deere & Company (DE) Tops Q1 Earnings & Sales February 17, 2017 - Zacks.com
Deere & Company is among World's Top 50 Most Admired Companies
PR Newswire (press release) - Feb 16, 2017
MOLINE, Ill., Feb. 16, 2017 /PRNewswire/ -- Deere & Company (NYSE: DE) has again been included in Fortune Magazine's ranking of the World's Top 50 Most Admired Companies.
Berkshire Hathaway, Deere among '50 Most Admired Companies' - Business Record
Stocks Taking Sector High- Deere & Company (NYSE:DE), AMETEK, Inc. (NYSE:AME) - Seneca Globe
Insider Trading Activity Deere & Company (NYSE:DE) – CEO Sold 28808 shares of ...
Market Exclusive - 10 hours ago
On 4/3/2014 Samuel Allen, CEO Sell, 32,371 $92.02 with an average share price of $2,978,779.42 View SEC Filing 8/23/2013 per share and the total transaction amounting to Rajesh Kalathur.
Deere & Company (DE) Moves Lower on Volume Spike for February 23
Equities.com - 12 hours ago
Deere & Company (DE) traded on unusually high volume on Feb. 23, as the stock lost 1.75% to close at $107.73. On the day, Deere & Company saw 4.16 million shares trade hands on 29,387 trades. Considering that the stock averages only a daily volume of ...
Deere: Cautioning Investors
Seeking Alpha - Feb 18, 2017
Last fall I told you that sometimes we get it wrong. This was particularly true for the hold call assigned to Deere & Co. (NYSE:DE) in 2016. Despite getting it wrong, and watching the stock rise 20%, I kept the hold rating, saying 'we missed this one ...
Shareholders Meet to Learn What's Next for Deere & Co.
Peoria Public Radio - Feb 21, 2017
If approved, it would allow ten percent of Deere shareholders to call for a vote on issues without having to wait for the next annual meeting.
Forward Earnings Estimate of Deere & Company(DE)
Highland Mirror - Feb 23, 2017
Deere & Company(DE): For the most recent quarter end, Deere & Company reported Annual Earnings of $0.61. Based on the filings, last years Annual Earnings was, $4.81.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for DE to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate DE's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$107.73 Current Price

$115.59 Growth Price (DCF)

Undervalued by 7.30%


Growth Rate Assumed by Market: 7.98%


Future Free Cash Flow Growth Rate: 10.1%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$88.57 Book Price

Overvalued by 17.79%


Poor Cash Return on Invested Capital over the past 5 years

DE has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

DE has only created $2.81 of cash for every $100 invested.
Figures in USD. Fiscal year ends in October
20122013201420152016
Free Cash Flow -953.30M 879.00M 866.60M 914.20M 3.12B
divided by
Invested Capital 31.05B 32.41B 35.10B 32.94B 33.96B
Cash ROIC -3.07% 2.71% 2.47% 2.78% 9.19%

Excellent Return on Equity over the past 5 years

Over the past 5 years, DE has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

DE has generated $33.28 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in October
20122013201420152016
Net Income 3.07B 3.54B 3.16B 1.94B 1.52B
divided by
Stockholders' Equity 6.84B 10.27B 9.06B 6.74B 6.52B
Return on Equity 44.89% 34.46% 34.90% 28.78% 23.37%

Excellent Business Performance over the past 10 years

DE has been able to maintain profitability in good times and bad. This could mean DE has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

DE has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Free Cash Flow 1.28B 340.80M 676.70M 969.40M 645.50M -953.30M 879.00M 866.60M 914.20M 3.12B

Weak Balance Sheet

DE's financial position is not ideal. The key is to check whether DE is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Cash 3.90B 3.19B 4.84B 4.02B 4.43B 6.12B 5.13B 5.00B 4.60B 4.79B
Current Assets 27.84B 27.84B 30.86B 33.37B 36.31B 42.72B 45.10B 46.04B 42.14B 46.91B
Total Assets 38.58B 38.73B 41.13B 43.27B 48.21B 56.27B 59.52B 61.34B 57.95B 57.98B
Current Liabilities 15.92B 15.26B 12.75B 14.36B 17.72B 19.09B 21.98B 21.23B 20.41B 19.24B
Total Liabilities 31.42B 32.20B 36.31B 36.98B 41.41B 49.42B 49.26B 52.27B 51.20B 51.46B
Stockholder' Equity 7.16B 6.53B 4.82B 6.29B 6.80B 6.84B 10.27B 9.06B 6.74B 6.52B
Current Ratio 1.75 1.82 2.42 2.32 2.05 2.24 2.05 2.17 2.06 2.44
TL-to-TA 0.81 0.83 0.88 0.85 0.86 0.88 0.83 0.85 0.88 0.89

Consistent Reinvestment of Profits over the past 10 years

DE has consistently retained profits. This may put DE in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, DE can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Retained Earnings 9.03B 10.58B 10.98B 12.35B 14.52B 16.88B 19.65B 22.00B 23.14B 23.91B
Retained Earnings Growth - 17.15% 3.78% 12.50% 17.54% 16.23% 16.42% 12.01% 5.18% 3.31%

Competitive Industry over the past 10 years

DE is likely operating in an industry with medium to low barriers to entry. This may mean that DE doesn't have a characteristic that's hard to replicate, such as exclusive distribution, branding or the ability to keep costs low. If Gross Margins are at least satisfactory, it's likely that DE invests heavily in R&D and Sales, General & Administrative expenses.

Only $7.36 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Net Income 1.82B 2.05B 873.50M 1.87B 2.80B 3.07B 3.54B 3.16B 1.94B 1.52B
divided by
Revenue 24.08B 28.44B 23.11B 26.00B 32.01B 36.16B 37.80B 36.07B 28.86B 26.64B
Net Profit Margin 7.56% 7.22% 3.78% 7.17% 8.75% 8.50% 9.36% 8.77% 6.72% 5.72%

Satisfactory Pricing Power over the past 10 years

Consistency is vital. DE has been able to maintain gross margins fairly consistently, which is a strong indication of their ability to raise prices with inflation. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$31.32 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Gross Profit 7.83B 8.86B 6.86B 8.61B 9.98B 11.03B 12.13B 11.29B 8.72B 8.40B
divided by
Revenue 24.08B 28.44B 23.11B 26.00B 32.01B 36.16B 37.80B 36.07B 28.86B 26.64B
Gross Margin 32.51% 31.17% 29.67% 33.09% 31.17% 30.50% 32.09% 31.31% 30.21% 31.51%

High Capital Intensity over the past 10 years

DE spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

84.81% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Capital Expenditure 1.48B 1.61B 1.31B 1.31B 1.68B 2.12B 2.38B 2.66B 2.83B 644.40M
divided by
Net Income 1.82B 2.05B 873.50M 1.87B 2.80B 3.07B 3.54B 3.16B 1.94B 1.52B
Capital Expenditure Ratio 81.47% 78.34% 149.75% 70.39% 60.03% 69.05% 67.14% 84.07% 145.61% 42.29%

Very Strong Dividend History over the past 10 years

DE has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests DE is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Dividend Paid 386.70M 448.10M 473.40M 483.50M 593.10M 697.90M 752.90M 786.00M 816.30M 761.30M
divided by
Shares Outstanding 455.00M 436.30M 424.40M 428.60M 422.40M 401.50M 389.20M 366.10M 336.00M 316.60M
Dividend Paid Per Share 0.85 1.03 1.12 1.13 1.40 1.74 1.93 2.15 2.43 2.40
Price at Year End 84.93 35.32 52.73 81.65 77.35 84.55 90.82 89.46 77.50 103.04
Dividend Yield 1.00% 2.91% 2.12% 1.38% 1.82% 2.06% 2.13% 2.40% 3.13% 2.33%

Strong History of Stock Buybacks over the past 10 years

DE has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in October
2007200820092010201120122013201420152016
Shares Outstanding 455.00M 436.30M 424.40M 428.60M 422.40M 401.50M 389.20M 366.10M 336.00M 316.60M
Stock Bought Back - 4.29% 2.80% -0.98% 1.47% 5.21% 3.16% 6.31% 8.96% 6.13%
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