I’ve been involved with this company’s shares, and at some point, I looked at the charts and realized the price was in a so-called price range/channel, so I took a few short-term quick profits. Now another grand is invested, waiting for it to rise a bit.
Now I’m considering if it would be sensible to invest for the longer term.. are there any DE experts on the forum?
About the company:
P/E ratio 16.2 (if that tells anything..?)
Globally, generally a market leader in agricultural machinery, and in the US, in tractors/harvesters
Food needs to be produced, so a stable industry
The forest machine side comprises a very small part of the business, so a direct comparison to Ponsse is probably not sensible.
Great thread opener. The world’s largest agricultural machinery manufacturer certainly needs its own thread.
My own thoughts on the company.
The brand is very strong. People who are not in the agricultural sector recognize the green tractor with yellow rims.
There is pricing power because the products do not compete in the “cheapest bid” category.
Deere is a special brand because it is associated with a lot of emotion. And people who have fallen for Deere also stay with the brand.
There are many spare parts that can only be obtained through Deere. For example, there are many more aftermarket spare parts for MF (Massey Ferguson).
The machines are also in demand as used equipment, which supports pricing power.
I haven’t really studied the company in depth myself, but I’ll be interested to read if some competent forum member takes the time to analyze the company’s figures.
A good start on an interesting company. There seems to be little interest in it as an investment in Finland, which I think is a shame. I’m not an expert, but I have researched it a fair bit.
It operates globally in over 100 locations and employs approximately 75,600 people. The company has 25 brands, among which Wirtgen, Hagie, PLA, Mazzotti, and Monosena are notable. Founded in 1837, its first product was a plowing plow. It manufactures machines of all sizes, from lawnmowers to heavy industrial machinery, as well as engines and powertrains. It also offers financial services.
Sales distribution:
2022 targets
Net income $7.0-7.4 billion, cash flow $5.6-6.0 billion.
In connection with Q2, the outlook stated: “Looking ahead, we believe demand for agricultural equipment will continue to benefit from positive fundamentals despite availability issues and inflationary pressures affecting our customers’ production costs,” May said. “The company’s intelligent industrial strategy and recently announced Leap Ambitions targets are focused on helping customers manage higher costs and increasingly scarce inputs while improving their profitability through integrated technologies.”
In my opinion, the company’s strong market position and partly established customer base support its development well. The product range is very broad but fits together well as a package. The selection supports the company’s operations and provides support for various market situations. Deere is, of course, on the verge of a major transformation as fossil fuels are phased out, but this brings enormous potential and a market as machine inventories are renewed. However, this transformation also presents the possibility of making wrong decisions.
What I ponder is how such an “old-school” company stays relevant in the current market and keeps up with the pace of change. If the leadership becomes too “aged,” renewal suffers. Q3 is coming in August, so there is time to research more and see what the company holds. Based on current feelings, it seems like a rather stable company with good potential.
I’m writing this as an owner. I became interested in Deere in 2015, influenced by a couple of major investors. Jim Rogers wrote in favor of agriculture, considering it a good investment because it had long been neglected and undervalued. He argued that food is a necessity and its value would eventually rise. We’ve seen this happen with the war in Ukraine.
Personally, I don’t like or prefer to invest in businesses with a low return on capital. Seppo Saario said in his book that ROE should be over 12%. If the index yields 8% and your investment’s return on capital is 6%, how can you beat the index in the long run? For this reason, in my long-term investments, I don’t typically invest in traditional sectors like agriculture, industry, etc. But even in these sectors, there are winners who make money. Saario also advises making long-term investments in market leaders. Since Jim Rogers’ story was appealing, I considered these potential winners in agriculture. Warren Buffett’s portfolio included Deere, and I became interested in the company.
I probably bought the first lots in 2015, and now my portfolio includes shares bought at just under $77. Deere rose with a huge return, I think it was over 400%, becoming one of the top five investments in my Nordnet portfolio. The dividend was around 1%, and the multiples were, in my opinion, high, so I lightened my position in the company a couple of times last year between €350 and $400. I still see the company as a strong player in the agricultural sector, and the sector now has quite good prospects, in my opinion. I intend to hold the stock, but I might still take some money out if there’s something else more appealing in terms of valuation. Deere is quite cyclical, so there’s plenty of fluctuation. There was a good introduction to the company above, so I won’t add more. The Ukraine case has brought excellent publicity to the company, as its products have been used to tow tanks, and stolen machines couldn’t be used because they were remotely disabled. This shows that the company is indeed moving forward in terms of development. The discussion above mentioned power sources, but another big thing I see is automation and self-driving. I suspect tractors will be moving in fields on their own long before self-driving cars become common. But before that, Deere will go through many significant ups and downs. For now, I’m at least reasonably cautious and more inclined to sell than buy. On the other hand, when the war eventually ends and agriculture there begins to return to its former level, where do you think those machines will be sought after then? That gives a pretty quick idea of the company’s strength.
Despite lower earnings, Deere has maintained a positive outlook for the full fiscal year 2024, and the company forecasts net income to be between $7.5 and $7.75 billion.
The company’s strategy of shifting towards more technology- and solution-based services is expected to support this outlook by increasing revenue stability and growth through more recurring revenue streams.
Deere released its interim report. Headwinds persist right now, but Deere is a cyclical company. This month marks 10 years as a shareholder, and I have plenty of faith in the company even during weaker times. If you’re planning to become an owner, it’s worth taking a look at this company’s share buybacks. Over time, they have nicely reduced the number of shares while supporting EPS. Dividends play a smaller role in the total return expectation.
Deere Reports Third Quarter Net Income of $1.734 Billion
-Strong ag margins highlight continued value delivery amid market fluctuations.
-Global ag fundamentals are expected to remain weak as construction moderates.
-Full-year net income forecast unchanged despite challenging environment.
MOLINE, Illinois (August 15, 2024) — Deere & Company reported net income of $1.734 billion for the third quarter ended July 28, 2024, or $6.29 per share, compared with net income of $2.978 billion, or
$10.20 per share, for the quarter ended July 30, 2023. For the first nine months of the year, net income attributable to Deere & Company was $5.855 billion, or $21.04 per share, compared with $7.797 billion, or
$26.35 per share, for the same period last year.
Worldwide net sales and revenues decreased 17 percent, to $13.152 billion, for the third quarter of 2024 and decreased 11 percent, to $40.572 billion, for nine months. Net sales were $11.387 billion for the
quarter and $35.484 billion for nine months, compared with $14.284 billion and $41.765 billion last year, respectively.
Syklistä edelleen vastatuulta neljännellä vuosineljänneksellä. Tulevan vuoden ohjeistuksen edelleen reipasta laskua odotettavissa myös tuloksessa.
Deere Reports Net Income of $1.245 Billion for Fourth Quarter, $7.1 Billion for Fiscal Year
Results demonstrate solid execution despite ongoing market challenges.
Full-year 2025 earnings projected to range from $5.0 to $5.5 billion, highlighting improved
structural performance.
Remain committed to making investments that enhance customer productivity and profitability.
MOLINE, Illinois (November 21, 2024) — Deere & Company reported net income of $1.245 billion for
the fourth quarter ended October 27, 2024, or $4.55 per share, compared with net income of $2.369
billion, or $8.26 per share, for the quarter ended October 29, 2023. For fiscal-year 2024, net income
attributable to Deere & Company was $7.100 billion, or $25.62 per share, compared with $10.166 billion,
or $34.63 per share, in fiscal 2023.
At CES 2025, Deere & Co showcased fully autonomous vehicles, such as tractors and robotic lawnmowers, addressing labor shortages in agriculture and construction, among other sectors.
The company, with nearly 200 years of innovation history, combines cutting-edge hardware and software into a comprehensive platform, leveraging artificial intelligence and machine learning. This ecosystem provides customers with analytics and tailored recommendations, such as fertilizer and seed quantities.
The company has also invited third parties to develop applications for its platform, creating an “App Store for agriculture.” Autonomous machines improve productivity and safety, while “precision agriculture technology” reduces costs and increases yields. Even though the sector faces challenges like high interest rates, Deere expects AI to boost profits and dividend growth.
More on these matters can be found in the tweet below:
It’s interesting that it would be so cyclical. The lifespan of agricultural machinery is very long. A tractor can be in use for up to 40-50 years, longer than, for example, a passenger airplane. In addition, someone wrote there that it’s not as easy to find aftermarket spare parts for Deere’s equipment. Thus, the after-sales business must be huge, as the sold equipment base absorbs spare parts and maintenance services for decades.
For domestic companies like Valmet and especially KONE, the maintenance business is the main business, on which the value of these companies largely seems to be based. It is not very sensitive to economic cycles, and investors appreciate this.
Deere’s revenue exceeded forecasts, and the company maintained its outlook, even though demand for agricultural machinery has weakened due to high interest rates and decreased agricultural income. Segment-specific sales have decreased particularly in forest machinery.
Deere plans to focus on long-term investments and expand its digital solutions. Investors are somewhat concerned about potential tariffs and the global situation, etc.
Deere’s revenue and profit decreased from the previous year, especially as agricultural and forestry equipment sales weakened due to decreasing transport volumes; additionally, the small engine and lawn segment also declined slightly, even though prices had been raised.
The financial services’ result remained stable, and the company continued share repurchases. Management thanked the staff for their strong performance in a difficult market.
The tweet below highlights that farm consolidation increases the use of technology, which grows John Deere’s market share and improves its profitability and the share of recurring revenue.
The tweet also states that the digitalization of the industry is accelerated by the need for automation caused by labor and land shortages. Technologically skilled farmers gain a cost advantage, which can make traditional farming unprofitable – this can lead to a rapid acceleration of technology adoption across the industry.
In China, a fully autonomous electric tractor has been introduced, which handles the entire cultivation process and collects soil data in real-time simultaneously.
This is part of the Made in China 2025 program, which emphasizes high-tech and high-value production.
I mischievously posted this here in the John Deere thread, wondering if China’s progress in this field could also affect John Deere’s fortunes over time. I don’t know anything about this topic, but I guess it’s good to be aware of these Chinese developments.
John Deere reported significantly weaker earnings and revenue compared to the previous year.
The company states it is managing and monitoring inventories closely, and also mentioned reducing the amount of used equipment and investing in advanced technologies to improve customer productivity + to strengthen its market position in a challenging situation.
John Deere is centralizing its operations to improve efficiency and reduce costs.
Production is being strategically moved to Mexico and tasks are being combined so that the company can strengthen its competitiveness, react more agilely to market fluctuations, and secure its future growth.
John Deere exceeded expectations in revenue and earnings, even though net income declined from the prior year.
The guidance provided for next year fell short of market expectations, especially due to weak demand for large agricultural machinery. The forestry and construction equipment segments are expected to grow.
Management emphasized cost discipline and inventory management, in addition to the belief that the market cycle is turning for the better.
Deere presented investors with an ambitious plan, aiming for approximately 10 percent annual sales growth until 2030, along with higher-than-before 20% EBITDA margins, supported by data and AI services.
Investors were not enthusiastic about these targets; the stock price fell because the agricultural cycle is weak, machine sales have dropped, grain prices are low, and political talk about lowering prices generally made investors nervous. Investors are cautiously approaching the targets for now.
John Deere is reshaping its cost structure, and jobs are being lost in the U.S. Midwest as the company centralizes its operations in Mexico. This likely signals a longer-term direction where efficiency, flexibility, and margins carry more weight than so-called traditional local presence.
The article states that the move indicates the company is preparing for volatile demand cycles and tightening price competition. New investments support scalability and regional diversification, while older capacity is being phased out. This reflects an efficient and long-term approach where capital allocation is evaluated “dispassionately” based on the requirements of the coming years.
John Deere’s results exceeded expectations, and the company raised its full-year earnings guidance.
While demand for large tractors and combines continues to decline, strong momentum in small machinery and the construction segment balanced the situation.
Management believes the industry’s current downturn will bottom out this year. An improved order backlog and brightening US export prospects bolster confidence in future growth, although cost pressures and uncertainty continue to cast a shadow.
Deere’s stock rose as the Trump administration announced it would ease import tariffs on agricultural and construction machinery. For example, tariffs on combines and forklifts will drop from 25 percent to 15 percent; additionally, products containing a high amount of U.S. metal could see rates fall as low as 10 percent.
The market interpreted this as easing cost and demand pressures for Deere.
