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Deere: Interesting Long-Term Buy

Apr. 25, 2023 7:04 AM ETDeere & Company (DE)18 Comments
Investor Overview profile picture
Investor Overview


  • Deere saw revenue increases in all business segments due to a favorable volume/mix and partially due to price increases. These were partially offset by higher production and SG&A costs.
  • The outlook for 2023 looks good with revenue growth and operating margin improvement.
  • Over the past 4 years, more cash has been paid out than has been generated in free cash flow, so net debt has increased considerably.
  • Growth in sales and earnings, improved profit margins, attractive growing dividend and stock valuation make Deere an interesting long-term buy.
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Deere (NYSE:DE) has become a major player in the field of agricultural machinery. Both sales and profit margin have grown significantly in recent years. Investors are enthusiastic and the share price has risen sharply as a result; especially since the corona

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Investor Overview profile picture
I'm a passionate investor with 12 years of stock market experience who shares my analyses with other investors on Seeking Alpha. My articles usually contain a good overview of important investment criteria. A stock for my portfolio is of interest to me if the company has the following characteristics:1. Companies that are growing in both revenue, earnings and free cash flow.2. Companies that have excellent growth prospects.3. Stocks with favorable valuations.I prefer steadily growing companies with high free cash flow margins, dividend stocks and stocks with generous share repurchase programs.I currently invest in about 10-15 stocks that meet the above criteria, but I also own a handful of regional bank stocks. Disclaimer: My articles do not provide financial advice, they reflect my own findings and insights.

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Comments (18)

News blip ( news.yahoo.com/... ) forgotten in a day unless other states follow suit. Hits at the home of a "self-reliant" American spirit in owning ones destiny in providing a living.
thirdcamper profile picture
@Hugh Arhue Interesting legislation. I had thought Deere already addressed this: www.bbc.com/...
@thirdcamper you are likely right, but it doesn't preclude politicians from creating re-election sound bites and evening news polling number strategies.
thirdcamper profile picture
@Hugh Arhue I'm just trying to discern how or whether such legislation would affect DE's bottom line. CFRA, Morningstar, and others should weigh in eventually and enlighten.
I love Deere on the long term. I don't like Deere on the price in the short term. It needs to drop 30-50.00 before I can actively start buying it again. I think the price is a touch high to buy in
@bsuszka does 30-50 really matter long term? This stock should be over $600
@Peterso21 "should"...tricky word :) not sure how the 49B in net debt plays into that valuation...
thirdcamper profile picture
@bsuszka Interesting, because I think DE share price is now below fair value - more than in years.

PEG 0.29 , Forward PEG 0.96 - Peter Lynch said all his ten-baggers came from stocks below 1 PEG, and I always think if PEG and forward PEG are both that, it's a good sign.

PE 14.4, Forward PE 12.86 = really modest price.

I'd be happy to buy here if I didn't have a whale of a lot already, so I'm working on other things. DE price could come down further, and you might get what you seek, but the above numbers set us up for high probability of success going forward.
thirdcamper profile picture
DE, my favorite industrial (along with CAT) - excellent growth prospects if bought and held for the long duration.
it's a company w/ many fine qualities and tailwinds, but until net debt comes down drastically, i won't touch it...ymmv...
thirdcamper profile picture
@Sitnikov It's a fair point that they've taken on more debt, but the ratios are what matters most and debt/equity has been coming down steadily.
@thirdcamper but debt to EBITDA still very high (compare to CAT, etc)
thirdcamper profile picture
@Sitnikov I like CAT a lot. I think you have a point and understand your view, but think that DE will be all right and will grow out of the issue.
Well run company DE, with fair valuation. Great company for a long term portfolio.
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