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Category: Deere and Company (DE)
Date: 30 November 2020 Stock Price of Deere and Company: $261.95 We take a look at the 4th quarter 2020 earnings report from Deere and Company the tractor and agricultural machinery equipment supplier. For the quarter the group reported revenues of $9.731 billion and net income of $757 million.
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John Deere delivered another quarter of strong performance and a solid year despite the challenges associated with managing the pandemic" -John C. May, chairman and chief executive office
About Deere and Company
John Deere has developed a strategy to grow and sustain its successful global business. To learn more about our strategy, please watch the video featuring Chairman and CEO Sam Allen.
Since 1837, John Deere has capitalized on the opportunities presented by increasing population, prosperity, and urbanization. Today, broad trends based on population and income growth, especially in developing nations, are driving agricultural output and infrastructure investment. Further, technological advances and agricultural mechanization are expanding existing markets and opening new ones.
We believe John Deere is exceptionally well-positioned to seize these opportunities and fulfill our higher purpose of helping improve living standards for people everywhere through our commitment to those linked to the land.
Since 1837, John Deere has capitalized on the opportunities presented by increasing population, prosperity, and urbanization. Today, broad trends based on population and income growth, especially in developing nations, are driving agricultural output and infrastructure investment. Further, technological advances and agricultural mechanization are expanding existing markets and opening new ones.
We believe John Deere is exceptionally well-positioned to seize these opportunities and fulfill our higher purpose of helping improve living standards for people everywhere through our commitment to those linked to the land.
Overview of Deere and Company's 4th quarter 2020 earnings report
Data below refers to the latest quarter unless specified otherwise
- Total revenue: $9.731billion (down from $9.896 billion for the same quarter of the previous year)
- Total revenue decreased by -2% over the last 12 months
- Total expenses: $8.616 billion (down from $9.071 billion for the same quarter of the previous year)
- Total expenses decreased by -5% over the last 12 months
- Some margin gain for Deere and Co as their revenues decreased at a slower rate than that of their total expenses
- Net earnings: $757 million (up from $722 million for the same quarter of the previous year)
- Diluted earnings per share: $2.39 (up from $2.27 for the same quarter of the previous year)
- PE ratio of Deere and Company: 30
- Diluted number of shares outstanding: 316.6 million (down from 320.6 million for the same quarter of the previous year)
- Cash and cash equivalents: $7.066 billion
- Cash and cash equivalents per share: $22.31
- Cash and cash equivalents makes up 8.6% of Deere and Company's market capital
- Cash and cash equivalents makes up 9.4% of Deere and Company's total assets
- Trade accounts and notes receivables: $4.171 billion
- Trade accounts and notes receivables makes up 5.6% of Deere and Company's total assets
- Inventories $5.817billion
- Inventories makes up 7.7% of Deere and Company's total assets
- Finance receivables: $29.750 billion
- Finance receivables makes up 39.6% of Deere and Company's total assets
- Stockholders’ equity in Deere and Company: $12.944 billion
- Stockholders equity per share: $40.88
- Deere and Company is trading at 6.4 times its stockholders equity per share which is within the expected range of between 2 and 4 times that most firms tend to trade at
- For some perspective the average price to book value of firms in the S&P 500 is 3.9
- Cash generated from operations: $7.483 billion
- Cash generated from operations per share: $23.6
Deere and Company management commentary on their 4Q 2020 earnings
MOLINE, Illinois (November 25, 2020) — Deere & Company reported net income of $757 million for the fourth quarter ended November 1, 2020, or $2.39 per share, compared with net income of $722 million, or $2.27 per share, for the quarter ended November 3, 2019. For fiscal 2020, net income attributable to Deere & Company was $2.751 billion, or $8.69 per share, compared with $3.253 billion, or $10.15 per share, in 2019. Worldwide net sales and revenues decreased 2 percent, to $9.731 billion, for the fourth quarter of 2020 and declined 9 percent, to $35.540 billion, for the full year. Equipment operations net sales were $8.659 billion for the quarter and $31.272 billion for the year, compared with corresponding totals of $8.703 billion and $34.886 billion in 2019.
“John Deere delivered another quarter of strong performance and a solid year despite the challenges associated with managing the pandemic,” said John C. May, chairman and chief executive officer. “In this regard, I would like to pay tribute to the thousands of John Deere employees, dealers and suppliers throughout the world who have helped us safely maintain our operations and serve customers. Because of their contributions, Deere was able to complete a successful year and is positioned to continue providing differentiated solutions and unlocking even greater value for customers.”
“John Deere delivered another quarter of strong performance and a solid year despite the challenges associated with managing the pandemic,” said John C. May, chairman and chief executive officer. “In this regard, I would like to pay tribute to the thousands of John Deere employees, dealers and suppliers throughout the world who have helped us safely maintain our operations and serve customers. Because of their contributions, Deere was able to complete a successful year and is positioned to continue providing differentiated solutions and unlocking even greater value for customers.”
Company Outlook & Summary
Net income attributable to Deere & Company for fiscal 2021 is forecast to be in a range of $3.6 billion to $4.0 billion. In the year ahead, Deere expects to benefit from improving conditions in the farm economy and stabilization in construction and forestry markets, according to May. “Higher crop prices and improved fundamentals are leading to renewed optimism in the agricultural sector and improving demand for farm equipment,” he said. “At the same time, we are looking forward to realizing the benefits of our smart industrial operating strategy, which is designed to accelerate the delivery of solutions that will drive improved profitability and sustainability in our customers’ operations.
Net income attributable to Deere & Company for fiscal 2021 is forecast to be in a range of $3.6 billion to $4.0 billion. In the year ahead, Deere expects to benefit from improving conditions in the farm economy and stabilization in construction and forestry markets, according to May. “Higher crop prices and improved fundamentals are leading to renewed optimism in the agricultural sector and improving demand for farm equipment,” he said. “At the same time, we are looking forward to realizing the benefits of our smart industrial operating strategy, which is designed to accelerate the delivery of solutions that will drive improved profitability and sustainability in our customers’ operations.
Deere and Company (DE) stock price history over the last 5 years
The image below obtained from Google shows the stock price history of Deere and Company (NYSE: DE) for the last 5 years. And its been a very good time for Deere and Company stockholders. 5 years ago the stock of Deere and Company was trading at $79.60 and its currently trading at $261.95. That's a very decent return of 229.1% provided to Deere and Company stockholders over the last 5 years.
The stock of Deere and Company is trading at a little closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Deere and Company's stock is very positive at this point in time
The stock of Deere and Company is trading at a little closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Deere and Company's stock is very positive at this point in time
Deere and Company (DE) stock vs Caterpillar (CAT) stock over the last 5 years
The image below shows the stock price performance of Deere and Company (DE) compared to the stock price performance of Caterpillar (CAT) over the last 5 years. As the image below shows the trend of these two companies' stock price is very similar. The summary below shows the stock price returns provided by these two firms over the last 5 years.
The stock of Deere has easily outperformed that of Caterpillar over the last 5 years.
- Deere and Company (DE): 229.1%
- Caterpillar (CAT): 152.4%
The stock of Deere has easily outperformed that of Caterpillar over the last 5 years.
Recent coverage of Deere and Company
The extract below refers to the latest earnings from Deere and Company as obtained from Forbes.com
Deere & Company stock (NYSE: DE) is scheduled to report its fiscal fourth-quarter results on Wednesday, November 25. We expect Deere to likely beat the revenue expectations but earnings could be lower compared to the consensus estimates. Revenue growth is likely to be driven by improved demand for Agriculture as well as Construction equipment. Our forecast indicates that Deere’s valuation is around $216 a share, which is 17% lower than the current market price of around $259
Read the full article
Deere & Company stock (NYSE: DE) is scheduled to report its fiscal fourth-quarter results on Wednesday, November 25. We expect Deere to likely beat the revenue expectations but earnings could be lower compared to the consensus estimates. Revenue growth is likely to be driven by improved demand for Agriculture as well as Construction equipment. Our forecast indicates that Deere’s valuation is around $216 a share, which is 17% lower than the current market price of around $259
Read the full article
Our latest Deere and Company (DE) stock valuation
So what do we value the stock of Deere and Company at based on their latest set of earnings report and fiscal guidance provided? Considering the news of a share buy back, their strong cash generation and moderate inventory and accounts receivable levels our valuation model provides a target price (full value price) for Deere and Company at $180.40 a stock (up from our 2nd quarter 2020 earnings report valuation of Deere and Company). We therefore believe the stock of Deere and Company is overvalued
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price) which is $180.40 in this case. A good entry point into Deere and Company would therefore be at $162.40 or below.
We expect the stock of Deere and Company to pull back from its current price to levels closer to our target price in coming weeks and months.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price) which is $180.40 in this case. A good entry point into Deere and Company would therefore be at $162.40 or below.
We expect the stock of Deere and Company to pull back from its current price to levels closer to our target price in coming weeks and months.
Next earnings release of Deere and Company
It is expected that Deere and Company will release their 1st quarter 2021 earnings report in late February 2021