Deere & Co

DE

Farm Machinery & Equipment

Mkt Cap

$103.3B

PE

10.38

Debt

$17.12B

Cash

$5.3B

EV

$115.1B

FCF

$7.382B

Market Cap

$103.3B

P/E Ratio

10.38

Debt

$17.12B

Cash

$5.3B

EV

$115.1B

FCF

$7.382B

Charts data: {"Earnings":[{"time":"2014-10-30","value":3160700000},{"time":"2015-10-30","value":1939200000},{"time":"2016-10-30","value":1521500000},{"time":"2017-10-28","value":2158500000},{"time":"2018-10-27","value":2368000000},{"time":"2019-11-02","value":3253000000},{"time":"2020-10-31","value":2751000000},{"time":"2021-10-30","value":5963000000},{"time":"2022-10-29","value":7130000000},{"time":"2023-10-28","value":10155000000}],"Sales":[{"time":"2014-10-30","value":36066900000},{"time":"2015-10-30","value":28862800000},{"time":"2016-10-30","value":26644000000},{"time":"2017-10-28","value":29737700000},{"time":"2018-10-27","value":37357700000},{"time":"2019-11-02","value":39258000000},{"time":"2020-10-31","value":35540000000},{"time":"2021-10-30","value":44024000000},{"time":"2022-10-29","value":52577000000},{"time":"2023-10-28","value":61251000000}],"Net Margins":[{"time":"2014-10-30","value":0.0876343683543637},{"time":"2015-10-30","value":0.06718682872070623},{"time":"2016-10-30","value":0.0571047890707101},{"time":"2017-10-28","value":0.0725846316292114},{"time":"2018-10-27","value":0.06338719996145373},{"time":"2019-11-02","value":0.08286209180294463},{"time":"2020-10-31","value":0.07740574001125493},{"time":"2021-10-30","value":0.13544884608395422},{"time":"2022-10-29","value":0.13561062822146566},{"time":"2023-10-28","value":0.16579321153940343}],"Assets":[{"time":"2014-10-30","value":61336400000},{"time":"2015-10-30","value":57947600000},{"time":"2016-10-30","value":57981400000},{"time":"2017-10-28","value":65786300000},{"time":"2018-10-27","value":70108000000},{"time":"2019-11-02","value":73011000000},{"time":"2020-10-31","value":75091000000},{"time":"2021-10-30","value":84114000000},{"time":"2022-10-29","value":90030000000},{"time":"2023-10-28","value":104087000000}],"Stockholders Equity":[{"time":"2014-10-30","value":9065500000},{"time":"2015-10-30","value":6757600000},{"time":"2016-10-30","value":6530800000},{"time":"2017-10-28","value":9560500000},{"time":"2018-10-27","value":11291200000},{"time":"2019-11-02","value":11417000000},{"time":"2020-10-31","value":12944000000},{"time":"2021-10-30","value":18434000000},{"time":"2022-10-29","value":20265000000},{"time":"2023-10-28","value":21789000000}],"ROE":[{"time":"2014-10-30","value":0.348651480889085},{"time":"2015-10-30","value":0.2869657866698236},{"time":"2016-10-30","value":0.2329729895265511},{"time":"2017-10-28","value":0.2257727106322891},{"time":"2018-10-27","value":0.20972084455150913},{"time":"2019-11-02","value":0.28492598756240695},{"time":"2020-10-31","value":0.2125309023485785},{"time":"2021-10-30","value":0.323478355213193},{"time":"2022-10-29","value":0.35183814458425855},{"time":"2023-10-28","value":0.4660608563954289}],"ROA":[{"time":"2014-10-30","value":0.08904011321173072},{"time":"2015-10-30","value":0.05971084220916828},{"time":"2016-10-30","value":0.05152859365244716},{"time":"2017-10-28","value":0.06161313221749817},{"time":"2018-10-27","value":0.0752310720602499},{"time":"2019-11-02","value":0.0760707290682226},{"time":"2020-10-31","value":0.06831710857492909},{"time":"2021-10-30","value":0.10218275197945645},{"time":"2022-10-29","value":0.11317338664889481},{"time":"2023-10-28","value":0.1486448836069826}]}

Deere & Company manufactures and distributes various equipment worldwide. The company operates through four segments: Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services. The Production and Precision Agriculture segment provides mid-size tractors, combines, cotton pickers and strippers, sugarcane harvesters, harvesting front-end equipment, sugarcane loaders, pull-behind scrapers, and tillage and seeding equipment, as well as application equipment, including sprayers and nutrient management, and soil preparation machinery for grain growers. The Small Agriculture and Turf segment offers utility tractors, and related loaders and attachments; turf and utility equipment, including riding lawn equipment, commercial mowing equipment, golf course equipment, and utility vehicles, as well as implements for mowing, tilling, snow and debris handling, aerating, residential, commercial, golf, and sports turf care applications; other outdoor power products; and hay and forage equipment. This segment also resells products from other manufacturers. It serves dairy and livestock producers, crop producers, and turf and utility customers. The Construction and Forestry segment provides a range of backhoe loaders, crawler dozers and loaders, four-wheel-drive loaders, excavators, motor graders, articulated dump trucks, landscape and skid-steer loaders, milling machines, pavers, compactors, rollers, crushers, screens, asphalt plants, log skidders, log feller bunchers, log loaders and forwarders, log harvesters, and attachments; and roadbuilding equipment. The Financial Services segment finances sales and leases agriculture and turf, and construction and forestry equipment. It also offers wholesale financing to dealers of the foregoing equipment; and extended equipment warranties, as well as finances retail revolving charge accounts. Deere & Company was founded in 1837 and is headquartered in Moline, Illinois.

Sector

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DCF

Discounted Cash Flow Valuation of Deere & Co

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$7.382B	$8.857B	$10.48B	$12.22B	$14.06B	$15.93B	$17.79B	$19.56B	$21.19B	$22.6B	$23.73B	$237.3B
DCF		$7.702B	$7.924B	$8.037B	$8.036B	$7.919B	$7.689B	$7.354B	$6.928B	$6.426B	$5.867B	$58.67B
Value	$132.5B

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth 26%

Earnings Stability 84%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is high enough to offer a good protection on the profits in case of higher costs or higher interests. Furthermore higher margins reduce earnings’ volatility.

Over time the ROA has been increasing indicating a higher marginal ROA with respect to the calculated one, giving a good sign for continued growth.

Years	10-2015	10-2016	10-2017	10-2018	11-2019	10-2020	10-2021	10-2022	10-2023	TTM
Net Margin	6.7%	5.7%	7.3%	6.3%	8.3%	7.7%	14%	14%	17%	16%
ROA	6%	5.2%	6.2%	7.5%	7.6%	6.8%	10%	11%	15%	15%
ROE	29%	23%	23%	21%	28%	21%	32%	35%	47%	45%

What is the average Net Margin?

The average Net Margin over the past 5 years is +11.01%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is +2.08%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +9.73%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is +1.46%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +30.81%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is +4.55%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

Under the assumption that FCF does not diminish and debt does not increase, the current years to repay the debt are acceptable.

The Graham’s stability indicate reliability of earnings, and consideration about the future are more dependable.

Years	10-2015	10-2016	10-2017	10-2018	11-2019	10-2020	10-2021	10-2022	10-2023	TTM
Debt FCF	7.82	-	16.13	29.48	13.19	6.20	6.37	3.53	2.53	2.32
Debt Equity	3.53	-	2.71	2.41	2.65	3.19	2.38	0.62	0.82	0.78
MIN
Graham Stability	-	-	98%	100%	100%	100%	100%	100%	100%	98%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 2.32.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is -4.67.

What is the Graham’s Stability?

Graham’s Stability measure stands at 0.98.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has been increasing in past years.

Years	10-2016	10-2018	10-2020	10-2022	Trend
Revenue	13%	10%	20%	16%	3.6%
Net Income	31%	34%	55%	42%	9.5%
Stockholders Equity	19%	14%	19%	7.5%	2.7%
FCF	12%	50%	2.1%	99%	8.1%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +10.39%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is +3.61%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is +33.8%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is +9.54%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is +14.05%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is +2.65%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is +50.32%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is +8.15%.