Deere (DE:NYS) Fundamental Valuation Report

Fundamental Valuation Report


Industrials:Farm & Construction Machinery

This Report was generated using the valuation tools available on For a free 30 day trial click here.

Close Price/Date
$146.08 (USD) 19/12/2018

Weighted Valuation
$158.99 (USD)

Overall Rating
Undervalued by 8.8%

Valuation Models Analyst Consensus: $183.25 (USD)
(in order of importance) Comparables: $129.65 (USD)
Adjusted Book Value: $144.90 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Fairly valued on an Asset Valuation

Company Overview (DE:NYS USD)

Price 146.08
Range 144.31 – 151.99
52 week 130.56 – 171.49
Open 149.27
Vol / Avg. 3.15M/2.81M
Mkt cap 46.54B
P/E 23.91
Div/yield 2.58/0.02
EPS 7.24
Shares 318.57M
Beta 1.00

Company Description

Deere & Co is the world’s leading manufacturer of agricultural equipment with approximately $35 billion in annual revenue. The company is divided into two reportable segments 1) agriculture and turf and 2) construction and forestry. Approximately 55% of Deere equipment is sold in North America and Canada. The principle products harvested by Deere equipment include grain, oilseeds, cotton, sugar, and biomass. In 2018, agriculture and turf made up approximately 70% of total revenue while construction and forestry generated 30%.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for DE:NYS

Using a discounted cash flow model we generated an intrinsic value of $5.19 (USD) for DE:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

DE:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $5.19 1% 5% 1% 5%
WACC (or Ke) 6.12 $36.53 ($15.70)
Terminal Growth Rate 1.10 ($14.23) $34.26
Tax Rate 0.27 $19.58 ($9.20)
Cash Flow 5,932,244,700 ($7.92) $18.29
Capital Expenditures -1,532,460,000 $2.01 $8.37
Long Term Debt 37,219,400,000 $11.03 ($0.65)

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $129.65 (USD) for DE:NYS. We also generated a valuation of $156.62 (USD) using other metrics and comparables.
The comparable companies were and Caterpillar (CAT:NYS).

Company DE:NYS End Date Value
Earnings/Share $7.24 (USD)
Book Value/Share $32.51 (USD)
Sales/Share $107.88 (USD)
Cash Flow/Share $2.43 (USD)
EBITDA/Share $18.28 (USD)
Price Based on Comps Adjustment Factor (%)
$156.66 (USD) -44.6
$164.20 (USD) 84.9
$166.14 (USD) 12.0
($89.34) (USD) -94.7
$182.03 (USD) 31.9
DE:NYS Ratios Used Average Values CAT:NYS
24.24 PE Ratio 21.64 21.64
4.76 PB Ratio 5.05 5.05
1.44 PS Ratio 1.54 1.54
63.75 PCF Ratio 16.37 16.37
16.42 EV to EBITDA 9.96 9.96


Using a multiples approach we generated a valuation of  $141.47 (USD) for DE:NYS

Company DE:NYS End Date Value
Earnings/Share $7.24 (USD)
Book Value/Share $32.51 (USD)
Sales/Share $107.88 (USD)
Cash Flow/Share $2.43 (USD)
EBITDA/Share $18.28 (USD)
Price Based on Comps Adjustment Factor
$137.96 (USD) 0
$131.53 (USD) 0
$122.63 (USD) 0
$25.19 (USD) 0
$290.02 (USD) 0
Ratios Ratio Average
PE Ratio 19.06
PB Ratio 4.05
PS Ratio 1.14
PCF Ratio 10.37
EV to EBITDA 15.86

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  DE:NYS for the last 10 years was  4.09

We ran the Adjusted Book Value for  DE:NYS and generated a book value of  $35.45 (USD)
By multiplying these we get an adjusted valuation of  $144.90 (USD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for DE:NYS. The 4 analysts have a concensus valuation for DE:NYS for 2019 of $183.25 (USD).

DE:NYS Deere

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
4 1 0 4.5000 Outperform 2018-12-18

Current Price: 146.08 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 11.46 12.65 13.56
# EPS Analysts 6 5 2
Mean Revenue 36,994.30 38,463.00 39,980.50
# Revenue Analysts 4 4 2
Mean Target Price 183.25
Mean Cash Flow 14.45 15.92 15.83
Mean EBITDA 5,654.80 5,983.70 5,867.70
Mean Net Income 3,684.40 3,969.50 4,177.60
Mean Debt Outstanding 23,302.80 24,230.00 49,811.70
Mean Tax Rate 25.80 25.80 25.80
Mean Growth Rate 12.56
Mean Capital Expenditure 979.90 1,078.70 1,110.90

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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