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Deere & Company (DE)
:DE
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Deere
(NYSE:DE)74Outperform
Positive Factors
Earnings Potential
Deere will deliver considerably higher margins and earnings than in prior cycles, adding fuel to the normal cyclical multiple expansion on trough fundamentals.
Long-term Growth Opportunity
The precision ag opportunity is seen as a long-term secular growth opportunity that may be on the verge of becoming more material.
Negative Factors
Tariffs and Trade Tensions
China announced retaliatory tariffs on US goods totaling $14B in annual sales, primarily targeting farm equipment.
Deere (DE) vs. S&P 500 (SPY)
Market Cap
$124.41B
Dividend Yield1.29%
Average Volume (3M)1.52M
Price to Earnings (P/E)20.3
Beta (1Y)1.10
Revenue Growth-20.93%
EPS Growth-34.33%
CountryUS
Employees75,800
SectorIndustrials
Sector Strength66
IndustryIndustrial Machinery
Share Statistics
EPS (TTM)22.56
Shares Outstanding271,413,940
10 Day Avg. Volume1,505,842
30 Day Avg. Volume1,521,376
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.60
Price to Cash Flow (P/CF)-27.50
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$494.00Price Target Upside5.67% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering12
Deere Business Overview & Revenue Model
Company DescriptionFounded in 1837, Illinois-based Deere & Co. manufactures and distributes various equipment that is used in agriculture, construction, forestry, and turf care. The company operates through three business segments: Agriculture and Turf, Construction and Forestry, and Financial Services.
How the Company Makes MoneyDeere & Company generates revenue primarily through the sale of its machinery and equipment in the Agriculture and Turf and Construction and Forestry segments. These segments account for the majority of its income, driven by the sale of tractors, combines, harvesters, and other agricultural equipment, as well as construction and forestry machinery. The Financial Services segment contributes to the company's earnings by providing financing options for equipment purchases, which facilitates customer acquisitions and loyalty. Additionally, Deere benefits from aftermarket services, including parts and maintenance, which provide a steady revenue stream. The company's earnings are further supported by its focus on innovation, such as precision agriculture technologies, and strategic partnerships that enhance its product offerings and market reach.
Deere Financial Statement Overview
Summary
Deere presents a strong financial profile with robust profitability and operational efficiency. The company's income statement reveals solid margins and stable revenue, while the balance sheet shows moderate leverage and impressive ROE, although equity reliance could be improved. Cash flows are healthy, despite recent fluctuations in free cash flow growth, indicating sound management.Income Statement
Deere shows strong income statement performance with a solid Gross Profit Margin of 36.85% in TTM (Trailing-Twelve-Months). The Net Profit Margin is healthy at 13.60%, reflecting efficient cost management. Revenue growth is positive, though recent growth is moderate, indicating stability in sales. EBIT and EBITDA margins of 21% and 24.11% respectively, suggest robust operational efficiency.85
Very Positive
Balance Sheet
The balance sheet indicates a stable financial position with a Debt-to-Equity Ratio of 0.57 in TTM, suggesting moderate leverage. The Return on Equity is impressive at 27.65%, showcasing effective use of equity capital. However, the Equity Ratio of 21.80% indicates a higher reliance on debt, which might pose a risk if not managed carefully.78
Positive
Cash Flow
Cash flow analysis reveals a strong Free Cash Flow to Net Income Ratio of 0.75, indicating good cash generation from operations. Operating Cash Flow to Net Income Ratio is 1.45, suggesting solid cash conversion. However, the Free Cash Flow Growth Rate is negative, which could reflect recent capital expenditures or other investments.80
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 46.93B | 50.52B | 61.22B | 52.58B | 43.03B | 34.72B | Gross Profit |
| 18.07B | 19.50B | 21.12B | 17.24B | 13.92B | 11.04B | EBIT |
| 10.23B | 11.43B | 15.34B | 10.19B | 8.60B | 5.13B | EBITDA |
| 13.41B | 14.67B | 17.04B | 11.03B | 10.41B | 7.72B | Net Income Common Stockholders |
| 6.22B | 7.10B | 10.17B | 7.13B | 5.96B | 2.75B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 7.82B | 8.48B | 8.40B | 5.51B | 8.74B | 7.71B | Total Assets |
| 103.12B | 107.32B | 104.09B | 90.03B | 84.11B | 75.09B | Total Debt |
| 64.66B | 65.46B | 63.69B | 51.90B | 48.41B | 46.00B | Net Debt |
| 58.05B | 58.14B | 56.23B | 47.13B | 40.40B | 38.93B | Total Liabilities |
| 80.56B | 84.39B | 82.20B | 69.67B | 65.68B | 62.15B | Stockholders Equity |
| 22.48B | 22.84B | 21.79B | 20.26B | 18.43B | 12.94B |
| Cash Flow | Free Cash Flow | ||||
| 4.23B | 7.59B | 4.12B | 911.00M | 5.15B | 4.83B | Operating Cash Flow |
| 9.01B | 9.23B | 8.59B | 4.70B | 7.73B | 7.48B | Investing Cash Flow |
| -6.26B | -6.46B | -8.75B | -8.48B | -5.75B | -3.32B | Financing Cash Flow |
| -995.00M | -2.72B | 2.81B | 826.00M | -1.08B | -980.00M |
Deere Technical Analysis
Neutral
467.50
Price Trends
457.63
Positive
438.67
Positive
407.16
Positive
Market Momentum
2.47
Positive
47.24
Neutral
20.23
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DE, the sentiment is Neutral. The current price of 467.5 is below the 20-day moving average (MA) of 478.29, above the 50-day MA of 457.63, and above the 200-day MA of 407.16, indicating a neutral trend. The MACD of 2.47 indicates Positive momentum. The RSI at 47.24 is Neutral, neither overbought nor oversold. The STOCH value of 20.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DE.
Deere Risk Analysis
Deere disclosed 31 risk factors in its most recent earnings report. Deere reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Deere Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $2.50B | 7.60 | 18.29% | 1.77% | -0.47% | -34.74% | |
74 Outperform | $124.41B | 20.32 | 27.91% | 1.29% | -20.93% | -34.33% | |
70 Outperform | $1.38B | 20.35 | 14.00% | 1.11% | -7.17% | -0.53% | |
66 Neutral | $156.16B | 14.82 | 55.36% | 1.69% | -3.36% | 9.59% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
55 Neutral | $477.77M | ― | -1.12% | ― | 1.32% | -104.92% | |
46 Neutral | $6.62B | 46.40 | -11.35% | 1.31% | -19.08% | -136.41% |
* Industrials Sector Average
Performance Comparison
DE
Deere
467.50
106.31
29.43%
AGCO
Agco
91.58
-15.57
-14.53%
CAT
Caterpillar
338.49
7.84
2.37%
LNN
Lindsay
129.85
11.31
9.54%
TEX
Terex
39.07
-17.47
-30.90%
TWI
Titan International
8.28
-4.14
-33.33%
Deere Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -1.90% | Next Earnings Date: May 16, 2025
Earnings Call Sentiment Neutral
The earnings call presents a mixed outlook with significant revenue and sales declines, particularly in production, precision ag, and construction segments. However, there are positive aspects such as improved margins, strong performance in financial services, and increasing technology adoption. Global sentiment is also showing signs of improvement. The overall sentiment is balanced with challenges and improvements being noted.Highlights
Positive Margin Improvements
Deere & Company completed the first quarter with a 7.7% margin for equipment, reflecting improvements over past quarters despite overall sales declines.
Strong Financial Services Performance
Worldwide Financial Services net income attributable to Deere & Company in the first quarter was $230 million, favorably impacted by a decreased valuation allowance on assets held for sale.
Improved Technology Adoption
Over 1,500 Precision Ag Essentials kits were ordered in Brazil, along with over 1,200 orders for JDLink Boost, signaling strong technology adoption.
Global Market Sentiment Improvement
Farmer sentiment is improving globally, with favorable currency movements in Brazil and better dairy and livestock margins in Europe.
Lowlights
Significant Revenue Decline
Net sales and revenues were down 30% to $8.508 billion, while net sales for the equipment operations were down 35% to $6.809 billion.
Decline in Production and Precision Ag Sales
Net sales of $3.067 billion were down 37% compared to the first quarter last year, primarily due to lower shipment volumes.
Challenges in Construction and Forestry
Net sales for the construction and forestry segment declined roughly 38% year over year to $1.994 billion, influenced by lower shipment volumes.
Uncertain Market Demand
Despite positive ag fundamentals, demand remains constrained by overall uncertainty in the market, impacting order velocities, particularly in North America.
Company Guidance
During Deere & Company's first quarter earnings call, several key metrics and guidance for fiscal 2025 were discussed. The company reported net sales and revenues down 30% to $8.508 billion, with equipment operations sales down 35% to $6.809 billion. Net income stood at $869 million, or $3.19 per diluted share, aided by $163 million in discrete tax benefits. The production and precision ag segment saw a 37% decline in net sales to $3.067 billion, while the small ag and turf segment experienced a 28% drop to $1.748 billion. Operating margins were reported at 11% and 7.1% for these segments, respectively. For the full year, the company forecasts production precision ag net sales to decrease by 15-20% and small ag and turf by 10%, with operating margins expected between 16-17% and 13-14% for these segments. The construction and forestry net sales fell 38% to $1.994 billion, with an operating margin of 3.3%, and are forecasted to decline by 10-15% for the year. Worldwide financial services net income was $230 million, with a full-year outlook of $750 million. Deere's full-year net income guidance remains between $5 billion and $5.5 billion, with an effective tax rate between 20% and 22% and operating cash flow projected between $4.5 billion and $5.5 billion.Deere Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Deere Appoints PACCAR CEO to Board of Directors
Positive
Nov 1, 2024
Deere & Company has appointed R. Preston Feight, CEO of PACCAR Inc, to its board of directors, enhancing its leadership with his extensive experience in engineering and strategic innovation. Feight is known for driving advancements in technology and manufacturing at PACCAR, positioning it as a leader in advanced powertrains and connectivity. His appointment aligns with Deere’s Smart Industrial Operating Model, aiming to boost productivity and sustainability.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.