|
Related Topics
|
Category: Stock Market and Deere and Company
Date: 22 May 2020 Stock Price: $142.81 We take a look at the 2nd quarter 2020 earnings report from Deere and Company the tractor and agricultural machinery equipment supplier. The group recorded net earnings of $666 million for the 2nd quarter of their 2020 fiscal year and reinstated their fiscal guidance for the full 2020 fiscal year
John Deere’s foremost priority in confronting the coronavirus crisis has been to safeguard the health and well-being of employees while fulfilling its obligation as an essential business serving customers throughout the world" -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 2nd quarter 2020 earnings report
Data below refers to the latest quarter unless specified otherwise
- Total revenue: $9.253 billion (down from $11.342 billion for the same quarter of the previous year)
- Total revenue decreased by -18.4% over the last 12 months
- Total expenses: $8.325 billion (down from $9.869 billion for the same quarter of the previous year)
- Total expenses decreased by -15.6% over the last 12 months
- Some margin squeeze for Deere and Co as their revenues decreased at a faster rate than that of their total expenses
- Net earnings: $666 million (down from $1.135 billion for the same quarter of the previous year)
- Diluted earnings per share: $2.11 (up from $3.52 for the same quarter of the previous year)
- PE ratio of Deere and Company: 16.8
- Diluted number of shares outstanding: 316.2 million (down from 322.2 million for the same quarter of the previous year)
- Cash and cash equivalents: $8.9 billion
- Cash and cash equivalents per share: $28.14
- Cash and cash equivalents makes up 19.7% of Deere and Company's market capital
- Cash and cash equivalents makes up 11.5% of Deere and Company's total assets
- Trade accounts and notes receivables: $5.986 billion
- Trade accounts and notes receivables makes up 7.7% of Deere and Company's total assets
- Inventories $6.171 billion
- Inventories makes up 7.9% of Deere and Company's total assets
- Finance receivables: $27.256 billion
- Finance receivables makes up 35.2% of Deere and Company's total assets
- Stockholders’ equity in Deere and Company: $11.865 billion
- Stockholders equity per share: $37.52
- Deere and Company is trading at 3.81 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 3.7. Read more about the S&P 500 here
- Cash generated from operations: $776 million
- Cash generated from operations per share: $2.45
- Cash generated from operations per share: $2.45
Deere and Company management commentary on their 2Q 2020 earnings
MOLINE, Illinois (May 22, 2020) — Deere & Company reported net income of $665.8 million for the second quarter ended May 3, 2020, or $2.11 per share, compared with net income of $1.135 billion, or $3.52 per share, for the quarter ended April 28, 2019. For the first six months of the year, net income attributable to Deere & Company was $1.182 billion, or $3.73 per share, compared with $1.633 billion, or $5.07 per share, for the same period last year.
“John Deere’s foremost priority in confronting the coronavirus crisis has been to safeguard the health and well-being of employees while fulfilling its obligation as an essential business serving customers throughout the world,” said John C. May, chairman and chief executive officer. “We’ve had good success in these areas thanks to the proactive measures we have taken to keep employees safe and our production facilities and parts distribution centers operational. At the same time, the company has reached out to our local communities to help those in need as a result of the pandemic. Deere and its employees have provided generous support to area food banks and other organizations offering assistance during this difficult time.”
“John Deere’s foremost priority in confronting the coronavirus crisis has been to safeguard the health and well-being of employees while fulfilling its obligation as an essential business serving customers throughout the world,” said John C. May, chairman and chief executive officer. “We’ve had good success in these areas thanks to the proactive measures we have taken to keep employees safe and our production facilities and parts distribution centers operational. At the same time, the company has reached out to our local communities to help those in need as a result of the pandemic. Deere and its employees have provided generous support to area food banks and other organizations offering assistance during this difficult time.”
Company Outlook & Summary
Net income attributable to Deere & Company is forecast to be in a range of $1.6 billion to $2 billion for the full year. However, many uncertainties remain regarding the effects of the COVID-19 global pandemic that could negatively affect the company's results and financial position in the future. “I would like to express my appreciation to the thousands of John Deere employees, dealers and suppliers who have worked tirelessly to keep our operations safe and our customers up and running during this challenging period,” May said. “Deere is well-known for developing strong relationships with a range of stakeholders, which prove extremely valuable in difficult times. We remain committed to offering a full suite of advanced digital tools that give our customers unique capabilities and help them do their work more efficiently and profitably. As a result, we’re confident the company will successfully manage the pandemic’s effects and strengthen its position serving customers in the future.
Net income attributable to Deere & Company is forecast to be in a range of $1.6 billion to $2 billion for the full year. However, many uncertainties remain regarding the effects of the COVID-19 global pandemic that could negatively affect the company's results and financial position in the future. “I would like to express my appreciation to the thousands of John Deere employees, dealers and suppliers who have worked tirelessly to keep our operations safe and our customers up and running during this challenging period,” May said. “Deere is well-known for developing strong relationships with a range of stakeholders, which prove extremely valuable in difficult times. We remain committed to offering a full suite of advanced digital tools that give our customers unique capabilities and help them do their work more efficiently and profitably. As a result, we’re confident the company will successfully manage the pandemic’s effects and strengthen its position serving customers in the future.
Deere and Company (NYSE:DE) stock price history
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 $93.40 and its currently trading at $142.81. That's a very decent return of 52.9% 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 low of $106.14 than it is to its 52 week high of $181.99 which to us is a clear indication that the short term sentiment and momentum of Deere and Company's stock is neutral to slightly positive.
The stock of Deere and Company is trading at a little closer to its 52 week low of $106.14 than it is to its 52 week high of $181.99 which to us is a clear indication that the short term sentiment and momentum of Deere and Company's stock is neutral to slightly positive.
Recent Google search trends DE stock price
The graphic below shows the trend in Google searches for DE stock price over the last 12 months in the United States as obtained from Google Trends. As it shows there is pretty consistent interest in the stock price of DE. DE stock price searches peaked towards the middle and end of March, which coincided with a strong decline in its stock price.
Deere and Co (NYSE: DE) stock vs Caterpillar (CAT) stock
The image below shows the stock price performance of Deere and Co (NYSE: DE) compared to the stock price performance of Caterpillar (NYSE: CAT) over the last 3 years. As the image below shows the trend of these two companies' stock price is very similar. Over the last three years the stock of Deere and Co increased by 15.31% while the stock of Caterpillar increased by 8.89% over the same time period. While the returns are fairly similar, the stock of Deere has slightly outperformed that of Caterpillar
Recent coverage of Deere and Company
The extract below refers to the latest earnings from Deere and Company as obtained from Barrons.com
Iconic American manufacturer Deere crushed Wall Street estimates for its fiscal second quarter ended May 3. Covid-19 impacted results, but the farming business held up pretty well, all things considered. The pandemic, however, is weighing on future earnings guidance and the new outlook Deere (ticker: DE) offered Friday isn’t pretty.
Deere earned $2.11 a share from $8.2 billion in equipment sales. Wall Street was looking for $1.72 in per share earnings from $7.9 billion in sales. The problem is guidance. Deere’s initial guidance—offered in November 2019, long before the pandemic was declared—called for about $2.9 billion in net income for fiscal year 2020. Guidance was withdrawn in March as world-wide Covid-19 infections grew. Deere’s new guidance, offered Friday, calls for about $1.8 billion of net income, down almost 40% from the original estimate and down almost 45% from the $3.2 billion earned in fiscal year 2019
Read the full article
Iconic American manufacturer Deere crushed Wall Street estimates for its fiscal second quarter ended May 3. Covid-19 impacted results, but the farming business held up pretty well, all things considered. The pandemic, however, is weighing on future earnings guidance and the new outlook Deere (ticker: DE) offered Friday isn’t pretty.
Deere earned $2.11 a share from $8.2 billion in equipment sales. Wall Street was looking for $1.72 in per share earnings from $7.9 billion in sales. The problem is guidance. Deere’s initial guidance—offered in November 2019, long before the pandemic was declared—called for about $2.9 billion in net income for fiscal year 2020. Guidance was withdrawn in March as world-wide Covid-19 infections grew. Deere’s new guidance, offered Friday, calls for about $1.8 billion of net income, down almost 40% from the original estimate and down almost 45% from the $3.2 billion earned in fiscal year 2019
Read the full article
Deere and Company (NYSE: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 $149.10 a stock (down from our 1st quarter 2020 earnings report valuation of Deere and Company). We therefore believe the stock of Deere and Company is fully valued to slightly 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 $149.10 in this case. A good entry point into Deere and Company would therefore be at $134.20 or below. We expect the stock of Deere and Company to to trade in a narrow range around its current 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 $149.10 in this case. A good entry point into Deere and Company would therefore be at $134.20 or below. We expect the stock of Deere and Company to to trade in a narrow range around its current price in coming weeks and months.
Next earnings release of Deere and Company
It is expected that Deere and Company will release their 3rd quarter 2020 earnings report in late August 2020