10Y annualized return is
excellent
at 17.7% per year
DE has met or exceeded earnings expectations in
all
recent quarters (10/10)
Moderate Price-to-Earnings Ratio
Attractive Price-to-Sales Ratio
Strong Return on Equity
Healthy Operating Profit Margin
Strong Current Ratio
High Interest Coverage
Strong Margin Management
Proactive Inventory Management
Diverse Market Presence
Improving Ag Fundamentals
Innovation in Precision Agriculture
High Price-to-Cash Flow Ratio
Elevated Price-to-Book Ratio
Moderate Net Profit Margin
High Debt-to-Equity Ratio
Low Cash Ratio
Declining Sales Performance
High Interest Rates Impacting Demand
Ongoing Market Uncertainty
Limited Visibility on Order Books
Deere & Company demonstrates solid business quality through effective margin management and proactive inventory control, but faces significant challenges with declining sales and market uncertainties. Future prospects appear cautiously optimistic, driven by improving agricultural fundamentals and technology innovation, although demand recovery remains uncertain.
Analysis Date: February 13, 2025
Last Updated: March 11, 2025
Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.
Deere & Company, often known as John Deere, makes machines that help farmers and construction workers. They produce tractors, combines, and other farming equipment to help grow crops, as well as machines like excavators and loaders for building and landscaping. They also offer financial services to help customers buy or lease their equipment. Founded in 1837 and based in Moline, Illinois, Deere & Company is a key player in the agricultural and construction industries.
Streams of revenue
Geographic Distribution
Core Products
Business Type
Business to Business
Competitive Advantages
Key Business Risks
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Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$881.42
Current Market Price: $429.57
IV/P Ratio: 2.05x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
51.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for DE
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (18.78)
P/B ratio ≤ 1.5 (5.19)
Current ratio ≥ 2.0 (2.20x)
Long-term debt < Net current assets (1.07x)
Margin of safety (51.0%)
DE does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
27.31%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-30)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
38.51%
Higher values indicate better efficiency in production
TTM (as of 2025-04-30)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
13.25%
Higher values indicate better overall profitability
TTM (as of 2025-04-30)
With a return on equity of 27.31%, the company demonstrates effective use of shareholder funds to generate profits.
The operating profit margin of 21.79% indicates efficient management of operational costs relative to revenue.
The net profit margin of 13.25% could be improved, suggesting that there may be inefficiencies or higher costs impacting net income.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
2.87x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q1 2025
Current Ratio
Current assets divided by current liabilities
2.20x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q1 2025
The current ratio of 2.20 indicates good short-term financial stability, showing that the company can easily meet its short-term obligations.
An interest coverage ratio of 3.03 shows that the company earns significantly more than it needs to pay in interest, indicating a solid ability to handle debt.
With a debt-to-equity ratio of 2.88, the company is heavily leveraged, which could pose risks during economic downturns.
A cash ratio of 0.19 indicates limited cash reserves relative to current liabilities, which might affect liquidity in tighter situations.
Meeting Expectations
Higher values indicate better execution and credibility
Recent Results
EPS
Deere achieved a 7.7% margin for equipment despite a challenging market environment, displaying effective cost management and operational efficiency. The company managed to maintain a disciplined focus on reducing inventory and optimizing production schedules.
The company successfully reduced field inventory levels across key segments, positioning itself well for future demand. This proactive approach indicates strong operational control and responsiveness to market conditions.
Deere has a broad geographical footprint, with significant operations in North America, Brazil, and Europe. The company is leveraging local market conditions, such as favorable currency movements in Brazil, to enhance profitability.
Net sales and revenues decreased significantly, with net sales for equipment operations down 35% year-over-year. This decline highlights the challenges faced in a competitive environment and macroeconomic uncertainty.
Elevated interest rates are dampening demand across key segments, particularly in construction and forestry, affecting overall market conditions and customer purchasing decisions.
US net cash farm income is projected to rise, supported by government aid and improving commodity prices, which could bolster demand for equipment in the agricultural sector.
Deere's focus on technology adoption, particularly in Brazil, is showing strong customer interest with significant orders for Precision Ag Essentials. This innovation is expected to drive future growth.
Despite positive signs, general uncertainty persists, affecting order velocities and limiting immediate demand recovery in key markets. Customers remain cautious in their purchasing decisions.
The company has less visibility on the order book in certain regions, such as Brazil, which may impact future sales forecasts and strategic planning.