It’s time to break down a not so popular name! Here is the break down on $DE, otherwise known as Deere & Company.
Current Price: $378.00
52/Wk High: $392.42
52/Wk Low: $117.85
Market Cap: $116.7 Billion
Dividend: $3.60 / 0.95% Yield
Read below for the breakdown!
John Deere ($DE) is a major equipment company that operates through three segments of focus; Agriculture & Turf, Financial Services, and Construction & Forestry.
According to Deere’s investor relations the company “will deliver intelligent, connected machines and applications that will revolutionize production systems in agriculture and construction”.
Breaking down John Deere’s stock price according to TREFIS (@trefis) 60.9% of the price is based on the Agriculture and Turf Equipment segment.
Furthermore, 23.6% is based on the Construction and Forestry segment while 14.6% is based on the Financial Services segment.
On a final note, 1% of the stock price is based on Unconsolidated Equipment Affiliates and 7.5% is representative of net debt.
Of late, John Deere has become a hot name within the markets, moving just over 37% to the upside throughout the last three months, leaving investors wondering if the stock is still a buy.
Digging into the numbers, John Deere delivered a Q1 2021 beat with an EPS of $3.87, much better than the analysts EPS consensus estimate of $2.17. On a year over year basis, EPS improved by 137.42%.
Revenues grew significantly as well, with net revenues totaling $9.112 billion for Q1, representing a 19% improvement in revenues on a year over year basis.
Net income also improved significantly, more than doubling to $1.224 billion, representing a 137% improvement in net income year over year.
Breaking down earnings further, the Equipment Operations segment experienced a net sales jump of 23% year over year, bringing the Equipment Operations net sales to $8.051 billion.
Furthermore, operating profit for the Equipment Operations segment totaled $1.380 billion, representing a strong 196% jump year over year in operating profit.
Net income skyrocketed as well within the Equipment Operations segment, increasing by 168% year over year to a strong $1.020 billion.
As for the Production and Precision Agriculture segment, the segment turned out $3.069 billion in net sales, representing a 22% increase on a year over year basis.
Rounding out the Production and Precision Agriculture segment, operating profit jumped by 195% year over year to $643 million while operating margin increased from 8.7% to 21%.
On a final earnings note, the Small Agriculture and Turf segment experienced a net sales jump of 27% while the Construction and Forestry segment experienced a net sales jump of 21% throughout Q1.
Shifting into the balance sheet the numbers are solid.
Total Debt: $45.965 Billion
Total Liabilities: $61.397 Billion
Total Assets: $75.480 Billion
Cash & Short Term Inv: $6.962 Billion
On a valuation basis, Deere & Company does trade at a premium.
Price to Earnings: 34.27x
Forward Price to Earnings: 20.57x
Price to Sales: 3.19x
Price to Book: 8.34x
Price to Cash Flow: 16.54x
Management has been effective as well.
Return on Equity: 26.60%
Return on Assets: 4.75%
Return on Invested Capital: 6.90%
Given the numbers the analysts are neutral with a mean price target of $370.81/share, representing a -1.71% downside.
The high price target is $430.00/share, representing a 13.98% upside, while the low price target is $287.00/share, representing a -23.93% downside.
The big money is also quite involved with 78.26% of John Deere being owned by institutions. Top holders include Cascade Investment, The Vanguard Group, and State Street Global Advisors.
On a technical basis John Deere is solid. According to the six-month charts the MACD is moving slightly to the downside with minimal momentum within a range of 10.53 to 9.17.
The six-month charts are also indicating an RSI of 63.16 and CCI of 83.46, both of which are on the high end.
In short, Deere & Company ($DE) is a solid company with expanding revenues, strong leadership, and a dividend that pays you to stay for the long term.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.