Deere and Company

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Deere and Company (NYSE:DE) is generally more commonly known by its leading brand of products: John Deere. The company is an iconic American brand that was founded back in 1837 an American blacksmith and manufacturer named, appropriately, John Deere. Deere and Company is now a global leader in the manufacturing and sales of multiple different lines of heavy machinery including agricultural, forestry, and construction, as well as consumer facing products like lawn care and garden supplies. Learn more

With a $105 billion USD market cap, Deere and Company isn’t a high growth stock these days, although its performance over the past year may make you think otherwise. Like many stocks, Deere and Company tumbled in March of 2020, hitting a multi-year low price level below $140 per share. In the 15 months since, Deere has returned 143% to shareholders, after hitting an all-time high of $400.34 per share as recently as last month in May. Can Deere and Company continue this strong performance into the future?

Deere and Company Stock Analysis: No longer is Deere and Company the same tractor and farm equipment brand that has been such a large part of America’s bedrock over the past few decades. The company has certainly caught up with the times and has introduced quite a bit of technology into its products. Smart agriculture is the next massive secular trend as farmers utilize technology to formulate more sustainable farming techniques. John Deere is building a lineup of smart farming machinery like the R4038 sprayer which uses sensors and robotics to spray crops with pinpoint accuracy, as well as distribute to each point in the crop in a different manner.

Another global trend that Deere and Company are focussing on is sustainability in its operations. By using renewable energies as 50% of the company’s energy supply, Deere and Company are able to reduce greenhouse gas emissions by 15%. Deere has also increased the use of recycled materials in building its new machinery by 30%, and have reduced carbon emissions by 90%.

One area of concern moving forward is how highly concentrated Deere’s customers are in North America. While the company does have global operations throughout Europe, Asia, and Australia, $18.3 billion of the $32 billion in major market sales in 2020 came from the U.S. or Canada. For the company to truly take the next step, some visible international expansion may help convince investors that Deere truly is a global brand in farming and agriculture.

Deere and Company exhibit all of the characteristics of a well established company that can certainly be a foundational part of any diversified portfolio. With strong ratios including a very tidy price to sales ratio of 2.6, and a company wide push to improve margins to over 15% by 2022, Deere is certainly on track to being one of the major players in the next generation of agricultural technology. The current 1.05% dividend yield doesn’t hurt either so for investors who are looking for a solid company that still has a little bit of room to grow, Deere makes for an excellent addition to any long term accounts.