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Category: Stock Market and Deere and Company
Date: 21 February 2020 Stock Price: $179.86 We take a look at the 1st quarter 2020 earnings report from Deere and Company the tractor and agricultural machinery equipment supplier. The group recorded net earnings of $517 million for the 1st quarter of their 2020 fiscal 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.
John Deere 333G
Overview of Deere and Company's 1st quarter 2020 earnings report
Data below refers to the latest quarter unless specified otherwise
- Total revenue: $7.631 billion (down from $7.984 billion for the same quarter of the previous year)
- Total revenue decreased by -4% over the last 12 months
- Total expenses: $7.062 billion (down from $7.307 billion for the same quarter of the previous year)
- Total expenses decreased by 3.35% over the last 12 months
- Net earnings: $517 million (up from $498 million for the same quarter of the previous year)
- Diluted earnings per share: $1.63 (up from $1.54 for the same quarter of the previous year)
- PE ratio of Deere and Company: 27.8
- Diluted number of shares outstanding: 317.2 million (down 1.7% from 322.7 million for the same quarter of the previous year)
- Cash and cash equivalents: $3.682 billion
- Cash and cash equivalents per share: $11.61
- Cash and cash equivalents makes up 6.5% of Deere and Company's market capital
- Cash and cash equivalents makes up 5.01% of Deere and Company's total assets
- Trade accounts and notes receivables: $5360 billion
- Trade accounts and notes receivables makes up 7.5% of Deere and Company's total assets
- Inventories $6.482 billion
- Inventories makes up 9% of Deere and Company's total assets
- Finance receivables: $27.294 billion
- Finance receivables makes up 38% of Deere and Company's total assets
- Stockholders’ equity in Deere and Company: $11.930 billion
- Stockholders equity per share: $37.61
- Deere and Company is trading at 4.78 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at
Deere and Company management commentary on their 1Q 2020 earnings
MOLINE, Illinois (February 21, 2020) — Deere & Company reported net income of $517 million for the first quarter ended February 2, 2020, or $1.63 per share, compared with net income of $498 million, or $1.54 per share, for the quarter ended January 27, 2019. Worldwide net sales and revenues decreased 4 percent in the first quarter of 2020 to $7.631 billion. Net sales of the equipment operations were $6.530 billion for the quarter, compared with $6.941 billion in 2019.
“John Deere’s first-quarter performance reflected early signs of stabilization in the U.S. farm sector,” said John C. May, chief executive officer. “Farmer confidence, though still subdued, has improved due in part to hopes for a relaxation of trade tensions and higher agricultural exports. At the same time, activity in the construction sector has slowed leading to lower sales and profit for our Construction & Forestry division. Also impacting results in Deere’s construction equipment business were our actions to reduce factory production and lower inventories in response to current market conditions. Additionally, the quarter included costs of a voluntary employee-separation program, which is among the steps Deere is taking to improve flexibility and efficiency.”
“John Deere’s first-quarter performance reflected early signs of stabilization in the U.S. farm sector,” said John C. May, chief executive officer. “Farmer confidence, though still subdued, has improved due in part to hopes for a relaxation of trade tensions and higher agricultural exports. At the same time, activity in the construction sector has slowed leading to lower sales and profit for our Construction & Forestry division. Also impacting results in Deere’s construction equipment business were our actions to reduce factory production and lower inventories in response to current market conditions. Additionally, the quarter included costs of a voluntary employee-separation program, which is among the steps Deere is taking to improve flexibility and efficiency.”
Company Outlook & Summary
Net income attributable to Deere & Company for fiscal 2020 is forecast to be in a range of $2.7 billion to $3.1 billion. “Looking ahead, we are particularly encouraged by the broad use of precision technologies and believe the company is well-positioned to strengthen its leadership in this vital area,” May said. “In addition, we are proceeding with a series of measures to create a more focused organizational structure that can operate with greater speed and agility. These steps are leading to improved efficiencies and helping the company focus its resources and investments on areas that have the most impact on performance.”
Net income attributable to Deere & Company for fiscal 2020 is forecast to be in a range of $2.7 billion to $3.1 billion. “Looking ahead, we are particularly encouraged by the broad use of precision technologies and believe the company is well-positioned to strengthen its leadership in this vital area,” May said. “In addition, we are proceeding with a series of measures to create a more focused organizational structure that can operate with greater speed and agility. These steps are leading to improved efficiencies and helping the company focus its resources and investments on areas that have the most impact on performance.”
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 $90.60 and its currently trading at $178.96. That's a very decent return of 97.5% provided to Deere and Company stockholders over the last 5 years.
The stock of Deere and Company is trading at a lot closer to its 52 week high of $180.48 than it is to its 52 week low of $132.68 which to us is a clear indication that the short term sentiment and momentum of Deere and Company's stock is very positive.
The stock of Deere and Company is trading at a lot closer to its 52 week high of $180.48 than it is to its 52 week low of $132.68 which to us is a clear indication that the short term sentiment and momentum of Deere and Company's stock is very positive.
Deere and Company ( NYSE:DE) stock price history 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 TheStreet.com
Agriculture and turf equipment maker Deere (DE) on Friday posted fiscal first-quarter earnings that handily beat analysts’ forecasts and reiterated its fiscal 2020 profit guidance amid signs of sunny skies ahead for the U.S. farming sector. The Moline, Ill-based company said it earned $517 million, or $1.63 a share, in its fiscal first quarter ended Feb. 2, up from $498 million, or $1.54 a share, in the comparable year-earlier period. Analysts polled by FactSet had been expecting earnings of $1.29 a share.
Sales rang in at $7.63 billion, down from $7.98 billion a year ago though ahead of analysts’ forecasts of $6.22 billion. Stabilization in the farming sector thanks to lower trade tensions in the wake of the U.S.-China phase one trade deal and expectations for stronger farm exports was partly offset by weakness in construction and forestry machinery sales, CEO John May said in a statement.
Read the full article
Agriculture and turf equipment maker Deere (DE) on Friday posted fiscal first-quarter earnings that handily beat analysts’ forecasts and reiterated its fiscal 2020 profit guidance amid signs of sunny skies ahead for the U.S. farming sector. The Moline, Ill-based company said it earned $517 million, or $1.63 a share, in its fiscal first quarter ended Feb. 2, up from $498 million, or $1.54 a share, in the comparable year-earlier period. Analysts polled by FactSet had been expecting earnings of $1.29 a share.
Sales rang in at $7.63 billion, down from $7.98 billion a year ago though ahead of analysts’ forecasts of $6.22 billion. Stabilization in the farming sector thanks to lower trade tensions in the wake of the U.S.-China phase one trade deal and expectations for stronger farm exports was partly offset by weakness in construction and forestry machinery sales, CEO John May said in a statement.
Read the full article
John Deere agricultural equipment
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 $174.90 a stock (up slightly from our 4th quarter 2019 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 (full value) price which is $174.90 in this case. A good entry point into Deere and Company would therefore be at $157.40 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 (full value) price which is $174.90 in this case. A good entry point into Deere and Company would therefore be at $157.40 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 2nd quarter 2020 earnings report in late May 2020