Deere & Company logged a 2.2% change during today's afternoon session, and is now trading at a price of $407.47 per share.
Deere & Company returned gains of 17.0% last year, with its stock price reaching a high of $450.0 and a low of $328.62. Over the same period, the stock underperformed the S&P 500 index by -2.0%. As of April 2023, the company's 50-day average price was $417.48. Deere & Company manufactures and distributes various equipment worldwide. Based in Moline, IL, the large-cap Industrials company has 82,200 full time employees. Deere & Company has offered a 1.2% dividend yield over the last 12 months.
The Company May Be Profitable, but Its Balance Sheet Is Highly Leveraged:
| 2017-12-18 | 2018-12-17 | 2019-12-19 | 2020-12-17 | 2021-12-16 | 2022-12-15 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $29,738 | $37,358 | $39,258 | $35,540 | $44,024 | $52,577 |
| Gross Margins | 33.0% | 32.0% | 32.0% | 33.0% | 34.0% | 33.0% |
| Operating Margins | 14% | 14% | 14% | 14% | 20% | 19% |
| Net Margins | 7.0% | 6.0% | 8.0% | 8.0% | 14.0% | 14.0% |
| Net Income (MM) | $2,159 | $2,368 | $3,253 | $2,751 | $5,963 | $7,131 |
| Net Interest Expense (MM) | -$900 | -$1,204 | -$1,466 | -$1,247 | -$993 | -$1,062 |
| Depreciation & Amort. (MM) | -$1,716 | -$1,927 | -$2,019 | -$2,118 | -$2,050 | -$1,895 |
| Earnings Per Share | $6.68 | $7.23 | $10.15 | $8.69 | $19.14 | $22.71 |
| EPS Growth | n/a | 8.23% | 40.39% | -14.38% | 120.25% | 18.65% |
| Diluted Shares (MM) | 323 | 327 | 321 | 317 | 312 | 314 |
| Free Cash Flow (MM) | $1,354 | $1,235 | $2,884 | $6,520 | $6,480 | $3,740 |
| Capital Expenditures (MM) | $846 | $587 | $528 | $963 | $1,246 | $959 |
| Net Current Assets (MM) | -$8,098 | -$10,423 | -$10,826 | -$9,566 | -$5,723 | -$4,198 |
| Long Term Debt (MM) | $25,891 | $27,237 | $30,229 | $32,734 | $32,888 | $33,596 |
| Net Debt / EBITDA | 5.25 | 5.26 | 5.4 | 5.28 | 3.73 | 3.84 |
Deere & Company has weak revenue growth and a flat capital expenditure trend, irregular cash flows, and a decent current ratio. We also note that the company benefits from exceptional EPS growth and average operating margins with a positive growth rate. However, the firm suffers from slimmer gross margins than its peers and a highly leveraged balance sheet.
A Very Low P/E Ratio but Trades Above Its Graham Number:
Deere & Company has a trailing twelve month P/E ratio of 12.4, compared to an average of 20.49 for the Industrials sector. Based on its EPS guidance of $33.05, the company has a forward P/E ratio of 12.6. The company doesn't provide forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 31.0%. On this basis, Deere & Company's PEG ratio is 0.4. Using instead the 10.8% weighted average of Deere & Company's earnings CAGR and the broader market's anticipated 5-year EPS growth rate, the company's PEG ratio is 1.14, which shows that its shares might be fairly priced. In contrast, Deere & Company is likely overvalued compared to the book value of its equity, since its P/B ratio of 5.09 is higher than the sector average of 3.78. The company's shares are currently trading 123.9% above their Graham number.
Analysts Give Deere & Company an Average Rating of Buy:
The 20 analysts following Deere & Company have set target prices ranging from $388.0 to $530.0 per share, for an average of $454.25 with a buy rating. As of April 2023, the company is trading -8.1% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Deere & Company has a very low short interest because 0.8% of the company's shares are sold short. Institutions own 78.8% of the company's shares, and the insider ownership rate stands at 0.19%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 8% stake in the company is worth $8,963,850,697.
