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Deere & Co #DE is an American engineering company that produces agricultural, construction and forestry equipment.

Deere & Co #DE is an American engineering company that produces agricultural, construction and forestry equipment.

21 September 2020

#DE manufactures products under the John Deere brand. The company operates in two segments – agriculture and construction and logging. The most popular products of the company are tractors, excavators and combines. However, the company also manufactures products for the harvesting of cotton and sugarcane in the agriculture segment and loading and harvesting machines in the construction and logging segment. The company is ranked 329 in the global Fortune 500 ranking. Deer & Co is the world’s largest manufacturer of agricultural equipment. The company also has good geographic diversification – it has production sites in the USA, Argentina, India, Brazil, Australia and several other Latin American and European countries. Most of these production points act as separate divisions, for example – John Deere Brazil. Thus, the company has divisions on almost every continent (with the exception of Africa and Antarctica). The company’s financial performance is stable. Both revenue and profit have shown constant growth over the past four years. The company also pays dividends.

The company’s largest competitors are the Caterpillar, Kubota and Mahindra brands. It should be noted that each of the companies is superior to Deer & Co in at least one aspect. However, John Deere is currently the largest brand in the agricultural sector, in this sector its competitors do not look so attractive.

Separately, I would like to note that the company’s revenues and profits are highly procyclical. Also, as in the case of Manitowoc, the company’s services are in great demand during economic expansion.

Facts of growth in share prices

Analysts believe that the company’s EPS in 2021 and 2022 will only grow and reach at least $ 9 and $ 10.75, respectively. Also, the financial indicators are quite attractive. And its leadership in the agricultural machinery sector makes the company a good investment in an economic boom.

Our verdict regarding the company

The company is attractive both in terms of its position in the sector and in terms of financial indicators. The P / E multiple is 20. The price of the company’s shares is at the level of the beginning of the year, so the upside potential, in my opinion, still remains.

Aravana Capital Management provides clients with profitability even during downturns in global equity and bond markets.


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21 September 2020
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