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Category: Stock Market and Deere and Company
Date: 26 August 2019 Stock Price: $147.02 We take a look at the latest financial results from Deere and Company the tractor and agricultural machinery equipment supplier for the 3rd quarter of their 2019 financial year.
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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.
Financial overview of Deere and Company's latest results
Numbers we are interested in: (for the quarter)
- Total revenue: $10.036 billion (down from $10.308 billion for the same quarter of the previous year)
- Total expenses: $8.923 billion (down from $9.118 billion for the same quarter of the previous year)
- Net Income Attributable to Deere & Company: $ 899 million (down from $ 910 million for the same quarter of the previous year)
- Diluted earnings per share: $ 2.81 (up from $ 2.78 for the same quarter of the previous year)
- PE: 15.9
- Diluted number of shares outstanding: 319.8 million (down from 328.0 million for the same quarter of the previous year)
- Cash and cash equivalents: $3.383 billion (down from $3.923 billion for the same quarter of the previous year)
- Cash and cash equivalents per share: $12.26
- Trade accounts and notes receivable - net: $6.758 billion (up from $6.208 billion for the same quarter of the previous year)
- Inventories $6.747 billion (up from $6.239 billion for the same quarter of the previous year)
- Total Deere & Company stockholders’ equity: $12.266 billion (up from $10.356 billion for the same quarter of the previous year)
- Net asset value a share: $38.45
Deere and Company management commentary on the results and earnings guidance
“John Deere’s third-quarter results reflected the high degree of uncertainty that continues to overshadow the agricultural sector,” said Samuel R. Allen, chairman and chief executive officer. “Concerns about export-market access, near-term demand for commodities such as soybeans, and overall crop conditions, have caused many farmers to postpone major equipment purchases. At the same time, general economic conditions remain positive and are contributing to strong results for Deere’s construction and forestry business.”
Company Outlook & Summary
Company equipment sales are projected to increase by about 4 percent for fiscal 2019 compared with 2018. Included in the forecast are Wirtgen results for the full fiscal year of 2019 compared with 10 months Deere Announces Third-Quarter Earnings of the prior year.
This adds about 1 percent to the company’s net sales forecast for the current year. Also included is a negative foreign-currency translation effect of about 2 percent for the year. Net sales and revenues are projected to increase about 5 percent for fiscal 2019. Net income attributable to Deere & Company is forecast to be about $3.2 billion. “In spite of present challenges, the long-term outlook for our businesses remains healthy and points to a promising future,” Allen said.
“We continue to expand our global customer base and are encouraged by response to our lineup of advanced products and services. Furthermore, we are fully committed to the successful execution of our strategic plan focused on achieving sustainable profitable growth. In support of the strategy, we are conducting a thorough assessment of our cost structure and initiating a series of actions to make the organization more structurally efficient and profitable.”
Company Outlook & Summary
Company equipment sales are projected to increase by about 4 percent for fiscal 2019 compared with 2018. Included in the forecast are Wirtgen results for the full fiscal year of 2019 compared with 10 months Deere Announces Third-Quarter Earnings of the prior year.
This adds about 1 percent to the company’s net sales forecast for the current year. Also included is a negative foreign-currency translation effect of about 2 percent for the year. Net sales and revenues are projected to increase about 5 percent for fiscal 2019. Net income attributable to Deere & Company is forecast to be about $3.2 billion. “In spite of present challenges, the long-term outlook for our businesses remains healthy and points to a promising future,” Allen said.
“We continue to expand our global customer base and are encouraged by response to our lineup of advanced products and services. Furthermore, we are fully committed to the successful execution of our strategic plan focused on achieving sustainable profitable growth. In support of the strategy, we are conducting a thorough assessment of our cost structure and initiating a series of actions to make the organization more structurally efficient and profitable.”
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. The group's stock has gone up significantly since 2016 when it was trading around $70 to the current stock price of close to $150 a share.
Deere and Company (NYSE:DE) stock valuation
So what is Deere and Company shares worth based on their latest financial results? And will the continued tariff war between the USA affect Deere and Company's business in terms of tariffs levied on American machinery and equipment as well as on American agricultural products? This certainly creates a bit of uncertainty with regards to their future earnings expectations. Based on all the financial information available from the group we value Deere and Company stock at $170.5 a share. We therefore believe that the group's stock offers value at its current price for long term fundamental investors. But we do caution investors to keep an eye out for the impact that the continued tariff war and potential slower economic growth (or even recession in the USA) will have on the group's future earnings.