Deere Stock Fair Value Calculation – DEERE Reports Strong Third Quarter Earnings Results for FY2023
August 29, 2023
☀️Earnings Overview
On August 18 2023, DEERE ($NYSE:DE) reported their earnings figures for the third quarter of FY2023, which ended on July 31 2023. They posted total revenue of USD 15.5 billion, a 12.2% increase compared to the same period in FY2022, and a net income of USD 3.0 billion, representing a 58.5% year-on-year increase.
Stock Price
On Friday, DEERE reported its strong third quarter earnings results for FY2023, which sent shockwaves through the market. DEERE stock opened at $407.7 and closed at $397.0, a decrease of 5.3% from its previous closing price of 419.2. This marked the largest single-day drop in the company’s stock price since July of this year. Analysts attribute DEERE’s strong financial performance to their continued investments in technology and innovation, as well as their focus on sustainability and environmental stewardship. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Deere. More…
| Total Revenues | Net Income | Net Margin |
| 60.37k | 10.04k | 15.9% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Deere. More…
| Operations | Investing | Financing |
| 7.18k | -8.62k | 3.69k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Deere. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 103.4k | 80.25k | 78.61 |
Key Ratios Snapshot
Some of the financial key ratios for Deere are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 20.1% | 50.5% | 24.6% |
| FCF Margin | ROE | ROA |
| 4.7% | 40.9% | 9.0% |
Analysis – Deere Stock Fair Value Calculation
At GoodWhale, we have conducted an analysis of DEERE‘s fundamentals and have identified a fair price for their stock. Using our proprietary Valuation Line, we have determined that the intrinsic value of DEERE share is around $474.2. Based on this analysis, we find that DEERE stock is currently undervalued, as it is currently being traded at $397.0. This means that there is an opportunity for investors to purchase DEERE stock at a discount of 16.3% relative to its intrinsic value. More…
Peers
Deere & Co. is an American corporation that manufactures agricultural, construction, and forestry machinery, diesel engines, drivetrains (axles, transmissions, gearboxes) used in heavy equipment, and lawn care equipment. In 2018, it was listed as 87th in the Fortune 500 America’s ranking and was ranked 329th in the global ranking. The company also provides financial services and other related activities. Deere & Co.’s main competitors are CNH Industrial NV, Caterpillar Inc, Hitachi Construction Machinery Co Ltd.
– CNH Industrial NV ($NYSE:CNHI)
CNHI is a world leader in the design and manufacture of agricultural and construction equipment. The company has a market cap of 17.03B as of 2022 and a ROE of 29.84%. CNHI produces some of the world’s most recognizable brands, including Case IH, New Holland, and Steyr. The company’s products are used in a variety of applications, including farming, construction, and landscaping.
– Caterpillar Inc ($NYSE:CAT)
Caterpillar Inc. is a publicly traded company with a market capitalization of 96.9 billion as of 2022. The company designs, manufactures, markets and sells machinery and engines used in construction, mining, and forestry applications worldwide. Caterpillar’s return on equity was 33.83% as of 2022.
Caterpillar is a leading manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The company also serves the defense, rail, and power generation industries. Caterpillar employs more than 130,000 people worldwide and operates in more than 200 countries.
– Hitachi Construction Machinery Co Ltd ($TSE:6305)
Hitachi Construction Machinery Co Ltd has a market cap of 574.79B as of 2022, a Return on Equity of 13.19%. The company is engaged in the manufacturing and selling of construction and mining equipment, as well as other related products and services. The company has a strong presence in Japan and Asia, and is expanding its operations globally.
Summary
Investing in DEERE is an attractive opportunity following the release of their third quarter earnings results for FY2023. Total revenue for the quarter was USD 15.5 billion, representing a 12.2% year-on-year increase. Net income was reported at USD 3.0 billion, a 58.5% improvement from the previous year.
Despite this positive news, DEERE’s stock price fell on the same day, suggesting that investors may be expecting more from the company. For those willing to take the risk, investing in DEERE could be potentially rewarding.
