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Category: Stock Market and Deere and Company
Date: 27 November 2019 Stock Price: $168.64 We take a look at the 4th quarter 2019 earnings report from Deere and Company the tractor and agricultural machinery equipment supplier. The group recorded net earnings of $3.25 billion for their 2019 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 4th quarter 2019 earnings report
Data below refers to the latest quarter unless specified otherwise
- Total revenue: $9.896 billion (up from $9.416 billion for the same quarter of the previous year)
- Total revenue increased by 5% over the last 12 months
- Total expenses: $9.071 billion (up from $8.437 billion for the same quarter of the previous year)
- Total expenses increased by 7.5% over the last 12 months
- Net earnings: $722 million (down from $785 million for the same quarter of the previous year)
- Diluted earnings per share: $ 2.27 (down from $ 2.42 for the same quarter of the previous year)
- PE ratio of Deere and Company: 23.2
- Diluted number of shares outstanding: 317.9 million (down 2.1% from 324.7 million for the same quarter of the previous year)
- Cash and cash equivalents: $3.857 billion
- Cash and cash equivalents per share: $12.13
- Cash and cash equivalents makes up 7.2% of Deere and Company's market capital
- Cash and cash equivalents makes up 5.28% of Deere and Company's total assets
- Trade accounts and notes receivables: $5.230 billion
- Trade accounts and notes receivables makes up 7.2% of Deere and Company's total assets
- Inventories $5.975 billion
- Inventories makes up 8.18% of Deere and Company's total assets
- Finance receivables: $29.195 billion
- Finance receivables makes up 39.9% of Deere and Company's total assets
- Stockholders’ equity in Deere and Company: $11.417 billion
- Stockholders equity per share: $35.91
- Deere and Company is trading at 4.7 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 4th quarter earnings
MOLINE, Illinois (November 27, 2019) — Deere & Company reported net income of $722 million for the fourth quarter ended November 3, 2019, or $2.27 per share, compared with net income of $785 million, or $2.42 per share, for the quarter ended October 28, 2018. For fiscal 2019, net income attributable to Deere & Company was $3.253 billion, or $10.15 per share, compared with $2.368 billion, or $7.24 per share, in 2018.
John Deere’s performance reflected continued uncertainties in the agricultural sector,” said John C. May, chief executive officer. “Lingering trade tensions coupled with a year of difficult growing and harvesting conditions have caused many farmers to become cautious about making major investments in new equipment. Additionally, financial services results have come under pressure due to operating-lease losses. At the same time, general economic conditions have remained favorable. This has supported demand for smaller equipment and led to solid results for Deere’s construction and forestry business, which had a record year for sales and operating profit.”
- Net sales increase 4% for fourth quarter and 5% for full year.
- Construction & Forestry reports higher sales and profit for year.
- Full-year 2020 forecast calls for net income of $2.7 to $3.1 billion, reflecting uncertainties in our equipment operations.
John Deere’s performance reflected continued uncertainties in the agricultural sector,” said John C. May, chief executive officer. “Lingering trade tensions coupled with a year of difficult growing and harvesting conditions have caused many farmers to become cautious about making major investments in new equipment. Additionally, financial services results have come under pressure due to operating-lease losses. At the same time, general economic conditions have remained favorable. This has supported demand for smaller equipment and led to solid results for Deere’s construction and forestry business, which had a record year for sales and operating profit.”
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. “Despite present challenges, the longer-term outlook for our businesses remains healthy and points to a promising future for Deere,” May said. “We are particularly encouraged by the adoption of precision technologies and believe we are well-positioned to be a leader in the delivery of smarter, more efficient and sustainable solutions to our customers. At the same time, we are committed to the successful execution of our strategic plan and have initiated a series of measures to create a leaner organizational structure that can operate with more speed and agility. We’re confident these steps will lead to improved efficiencies and help the company focus its resources and investments on areas that have the greatest 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. “Despite present challenges, the longer-term outlook for our businesses remains healthy and points to a promising future for Deere,” May said. “We are particularly encouraged by the adoption of precision technologies and believe we are well-positioned to be a leader in the delivery of smarter, more efficient and sustainable solutions to our customers. At the same time, we are committed to the successful execution of our strategic plan and have initiated a series of measures to create a leaner organizational structure that can operate with more speed and agility. We’re confident these steps will lead to improved efficiencies and help the company focus its resources and investments on areas that have the greatest 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 $86.60 and its currently trading at $168.64. That's a very decent return of 94.7% 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
Deere (DE - Get Report) shares were falling on an unexpected estimate that sales and earnings in 2020 would contract. But the company is creating an earnings safety net for the rough times. The stock fell as much as 5.4% to $167.05 in Wednesday trading. The Moline, Ill., company posted adjusted earnings per share of $2.14, beating analysts' estimates of $2.13. Revenue was $9.89 billion, ahead of Wall Street expectations of $8.43 billion.
But analysts were looking for slight revenue and earnings growth for 2020 and management guided for a contraction. Revenue guidance for the year is for a contraction of 5% to 10%. Net-income guidance is for a range of between $2.7 billion and $3.1 billion. Net income for 2019 is expected to be $3.25 billion. Management said falling demand is largely responsible for the guidance. The U.S.-China trade war is partly responsible for the falling demand, as it prompts fewer sales of agricultural products from the U.S. to China.
Read the full article
Deere (DE - Get Report) shares were falling on an unexpected estimate that sales and earnings in 2020 would contract. But the company is creating an earnings safety net for the rough times. The stock fell as much as 5.4% to $167.05 in Wednesday trading. The Moline, Ill., company posted adjusted earnings per share of $2.14, beating analysts' estimates of $2.13. Revenue was $9.89 billion, ahead of Wall Street expectations of $8.43 billion.
But analysts were looking for slight revenue and earnings growth for 2020 and management guided for a contraction. Revenue guidance for the year is for a contraction of 5% to 10%. Net-income guidance is for a range of between $2.7 billion and $3.1 billion. Net income for 2019 is expected to be $3.25 billion. Management said falling demand is largely responsible for the guidance. The U.S.-China trade war is partly responsible for the falling demand, as it prompts fewer sales of agricultural products from the U.S. to China.
Read the full article
John Deere digger
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 $172.40 a stock (up slightly from our 3rd quarter 2019 earnings report valuation of Deere and Company). We therefore believe the stock of Deere and Company is fully valued
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 $172.40 in this case. A good entry point into Deere and Company would therefore be at $155.20 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 (full value) price which is $172.40 in this case. A good entry point into Deere and Company would therefore be at $155.20 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 1st quarter 2020 earnings report in late February 2020