Deere and Co (DE)

[DewDiligence]

The ESG angle mentioned in the previous post (farmers using fewer chemicals as a consequence of precision ag) is rather dubious, IMO, but that’s a small matter in the overall evaluation of the investment thesis. DE could become a genuine ESG company when they start selling battery-driven tractors and combines.

[DewDiligence]

Barron’s Roundtable excerpt on DE:

https://www.barrons.com/articles/roundtable-2022-stock-market-investing-opportunities-51642216617

The first leg of the story was based on the agricultural-equipment upgrade cycle. The fleet was old, and as farmers upgraded, profitability would be on the rise. Now we are rolling through what we think is a decade-long story centered on innovations in precision agriculture.

…Deere’s stock can return an average of 15% over the next three years, which implies a $550 stock price in 2024, inclusive of a 1% dividend yield. It trades for 18 times estimated 2025 earnings.

…The take rate on precision ag is getting into an S-rate adoption curve as combines are turned into data centers, connected to spectrum, and connected to Deere’s operations centers. As a result of data optimization, farmers are using less pesticides and fertilizers, and producing crops with less water. Deere is a great ESG story.

The precision-ag business within Deere is hard to unpack because the company doesn’t fully disclose the numbers. We think it was about a $2 billion business last year, on its way to $3 billion in 2023. Long term, the [total addressable market] could be upward of $50 billion, if you think about the crop-yield improvement.

[DewDiligence]

DE—LOL re Barron’s headline:

https://www.barrons.com/articles/deere-stock-tesla-farming-51641568304

[DewDiligence]

DE showcases fully autonomous tractor for 2022 delivery:

https://www.deere.com/en/our-company/news-and-announcements/news-releases/2022/agriculture/autonomous-tractor-reveal/

https://finance.yahoo.com/news/john-deeres-autonomous-tractor-lets-180626533.html

[DewDiligence]

Those are grants, not buys.

[bulletproof]

Lots of insider buying, good sign

[DewDiligence]

DE posts solid FQ4Q21* results—guides_to_higher_profit_in_FY2022*

FY2022* GAAP EPS guidance is $20.70-22.30 (based on 314M diluted shares), up 8-17% vs actual $18.99 in FY2021.

All this in spite of the headwind from the recently settled labor strike that cut production during Oct and Nov.

PR:
https://www.deere.com/en/our-company/news-and-announcements/news-releases/2021/corporate/fourth-quarter-earnings/

CC slides:
https://s22.q4cdn.com/253594569/files/doc_financials/2021/q3/4Q_2021_Earnings-Call-Presentation.pdf

*DE’s fiscal year ends on October 31.

[Bountiful_Harvest]

John Deere posts record profit:

https://www.cnn.com/2021/11/24/business/john-deere-earnings-strike/index.html



Deere Expects Better Profits Despite Supply-Chain ‘Challenges.’ Earnings Were Strong.

https://www.barrons.com/articles/deere-de-stock-earnings-guidance-strike-51637688181

[Saving Grace]

Break the union and bring in the scabs!

They had an excellent deal giving them the 6% they were hung up on. Deere said give them the 6% and nearly everything else was agreed upon. Then the deep state democrats convinced 90% to shift gears and strike anyway now playing politics with the farmers during harvest season.

This is dirty politics and I say cut them loose as the strike is a coordinated stunt to really hurt the American farmer especially during an inflationary period where it's bad enough without the evil greed. Inflation will be off the charts. A can of corn will soon cost $5 but there won't be any corn left anyway.

Most don't even realize China has no food since two thirds of the country is destroyed by flood with most farmland wiped out and the storms, rain and earthquakes have not let up. Several dams are lost and why power is cut to manufacturing, steel mills, and even Tesla.

The U.S. was going to assist raising the amount of AG products and livestock we send to them. But now the union wants to pick a fight with farmers and make matters worse for everybody including our own families.

Not just no but hell no! They should be told immediately to grab their lunch box and get out. Negotiations are over and scab labor will be crossing the line for great hourly wages.

This is not the time to break the back of the American people and hard working farmers. But it is the time to break the back on the greed of the UAW. This is a planned attack on America as a whole. Pink slips for everybody who doesn't go back to work as anybody can be replaced. Welcome Scab labor and throw the rest off the property. Enough is Enough!

[DewDiligence]

US Agriculture Secretary Vilsack should STFU about the strike instead of siding with the strikers:

https://finance.yahoo.com/news/u-agriculture-secretary-vilsack-offers-223245414.html

[Bountiful_Harvest]

John Deere looks beyond the tractor and into farm management

https://www.agriland.co.uk/farming-news/john-deere-looks-beyond-the-tractor-and-into-farm-management/

[Bountiful_Harvest]

https://www.cnn.com/videos/business/2021/09/14/marketplace-africa-john-deere-farm-equipment-spc.cnn

[Bountiful_Harvest]

John Deere and Hitachi Construction Machinery to End Joint Venture Manufacturing and Marketing Agreements; John Deere to Acquire Deere-Hitachi Joint Venture Factories

https://www.prnewswire.com/news-releases/john-deere-and-hitachi-construction-machinery-to-end-joint-venture-manufacturing-and-marketing-agreements-john-deere-to-acquire-deere-hitachi-joint-venture-factories-301358973.html

John Deere buys autonomous tractor startup Bear Flag Robotics:

https://techcrunch.com/2021/08/05/john-deere-buys-autonomous-tractor-startup-bear-flag-robotics/

John Deere Buys Robotics Company For $250M

https://kiwaradio.com/local-news/john-deere-buys-robotics-company-for-250m/

John Deere profit doubles:

https://finance.yahoo.com/news/john-deere-profit-doubles-shares-153003468.html

[DewDiligence]

DE increases annualized dividend to $4.20—(from $3.60):

https://www.sec.gov/Archives/edgar/data/315189/000155837021012058/de-20210825xex99d1.htm

At the current share price ($373), the new payout represents a dividend yield of only 1.1%, leaving plenty of room of further increases.

[DewDiligence]

DE raises_FY2021_guidance_AGAIN—expects_profit_of_$5.7-5.9B—(up_from_$5.5B_3mo_ago,_$4.8B_6m_ago_and_ $3.8B_9mo_ago):

https://www.deere.com/assets/pdfs/common/our-company/news/deere-3q21-news-release.pdf

Based on 313M diluted shares, the $5.7-5.9B profit guidance translates into GAAP EPS of $18.21-18.85. At the current share price of $350, the EPS guidance equates to a P/E of 18-19x. (DE’s FY2021 ends 10/31/21.)

Despite everything above, the stock is down modestly today because investors figure things can’t get any better.

FY3Q21 CC slides:
https://s22.q4cdn.com/253594569/files/doc_financials/2021/q3/3Q_2021_Earnings-Call-Presentation.pdf

[Bountiful_Harvest]

https://www.agweb.com/news/machinery/new-machinery/john-deere-raises-cotton-bar-new-harvesters

Now if they just turn these green machines into EV machines...

[Bountiful_Harvest]

Nebraska's largest John Deere dealership says they're facing a [shortage of tractors] because they're seeing more farmers upgrade their equipment. ... “For the most part though, the shortage is due to the increase of demand, and manufactures are doing a pretty good job of increasing production to meet that demand.”

https://brownfieldagnews.com/news/equipment-dealers-may-face-equipment-shortages-from-high-demand/

[Bountiful_Harvest]

The Tesla of Farming:

https://www.fool.com/investing/2021/06/25/the-tesla-of-farming-should-you-buy-john-deere-sto/

"working on AUTONOMOUS ELECTRIC TRACTORS, semiautonomous tractors, autonomous DRONE sprayers, and much more. Is John Deere the Tesla of agriculture? "

https://www.fiercewireless.com/5g/john-deere-thinks-rural-5g-could-help-feed-world

[Bountiful_Harvest]

https://www.theverge.com/22533735/john-deere-cto-hindman-decoder-interview-right-to-repair-tractors

John Deere employs more software engineers than mechanical engineers now

Do you think about doing a fully electric tractor? Is that in your technology roadmap, that you’ve got to get rid of these diesel engines?

You’ve got to be interested in EVs right now. And the answer is yes. Whether it’s a tractor or whether it’s some other product in our product line, alternative forms of propulsion, alternative forms of power are definitely something that we’re thinking about. We’ve done it in the past with, I would say, hybrid solutions like a diesel engine driving an electric generator, and then the rest of the machine being electrified from a propulsion perspective.

“YOU’VE GOT TO BE INTERESTED IN EVS RIGHT NOW.”
But we’re just getting to the point now where battery technology, lithium-ion technology, is power-dense enough for us to see it starting to creep into our portfolio. Probably from the bottom up. Lower power density applications first, before it gets into some of the very large production ag equipment that we’ve talked about today.

[Bountiful_Harvest]

Spot on! Yes, this is the future of Farming and John Deere. Everything will be going EV, and HFC.

[budgetthis]

Rock on, John Deere.........

Took advantage of that buying opp yesterday........let’s get our $400+ in June, and make those Analysts (and us) happy....... lol.

$$ DE $$

[budgetthis]

Don’t know........!

But I do know we’re going to rock the next few months, at least, based on past earnings, future Company forecasts and Analyst prognostications.

What a great stock to own a whole bunch of, imho.

“She thinks my Tractor’s Sexy.......”

$$ DE $$

[Canna_Business]

Do tractors have 5G capability?

[DewDiligence]

New FY2021 profit guidance of $5.3-5.7B equates to GAAP EPS of $16.83-$18.10. (FY2021 ends on 10/31/21.)

[DewDiligence]

DE raises_FY2021_guidance_AGAIN—expects_profit_of_$5.3-5.7B—(up_from $4.6-5.0B_three_months_ago and $3.6-$4.0B guidance six months ago!):

https://finance.yahoo.com/news/deere-raises-forecast-profit-more-102753191.html

For related info, please see #msg-161984736 and #msg-161353722 (which are themselves related).

Despite a recent dip, DE is +33% in calendar 2021 and has nearly tripled from its 12-month low.

In the portfolios I manage that contain DE, the position is up more than 1200% (not including dividends) since inception 12 years ago.

DE’s own FY2Q21 PR:
https://s22.q4cdn.com/253594569/files/doc_financials/2021/q2/2Q_2021_News-Release-and-Financials.pdf

CC slides:
https://s22.q4cdn.com/253594569/files/doc_financials/2021/q2/2Q_2021_Earnings-Call-Presentation.pdf

[DewDiligence]

DE FY2Q21 earnings on 5/21/21:

https://investor.deere.com/home/#earnings-events

[BottomBounce]

**** $IDEX vs $DE "John Deere: ‘We believe in electric tractors. 100%’"

https://www.futurefarming.com/Machinery/Articles/2020/3/John-Deere-We-believe-in-electric-tractors-100-552869E/

https://www.barchart.com/story/stocks/quotes/IDEX/overview/1187370/solectrac-announces-expansion-of-its-tractor-reservation-campaign

[DewDiligence]

DE boosts_annualized_dividend_18%:

https://finance.yahoo.com/news/deere-company-raises-dividend-18-160500256.html

DE had to boost the dividend to keep up with the soaring share price, else the yield would have fallen below 1%. At the current share price ($345.55), the new annualized payout of $3.60 (up from $3.04) equates to a yield of 1.0%.

[DewDiligence]

Addendum—DE expects a $500M YoY increase in materials costs—mainly steel—during FY2021.

Bullish for CLF.

[DewDiligence]

During the CC Q&A, the CFO highlighted how the increased software component in tractor-and-combine sales is increasing the operating margin, a theme presented in #msg-161353722. Still, I’m not fully on-board with the notion (expounded in that post) that DE ought to be characterized as a network software company.

The stock is now +11% today to a new all-time high. Despite the bullish outlook for FY2021*, the stock’s enterprise value of ~$140B (including ~$40B of net debt) seems stretched. (I’m not selling any shares because my cost-basis is too low to take the tax hit.)

*Fiscal year ending 10/31/21.

[DewDiligence]

FY1Q21 CC slides:

https://s22.q4cdn.com/253594569/files/doc_financials/2021/q1/1Q_2021_Earnings-Call-Presentation.pdf

[DewDiligence]

DE’s own FY1Q21 PR:

https://www.deere.com/assets/pdfs/common/our-company/news/deere-1q21-news-release.pdf

[DewDiligence]

DE +6%/PM_on_FY1Q21_results—raised_FY2021_guidance:

https://finance.yahoo.com/news/1-deere-upgrades-2021-earnings-114838803.html

Deere & Co on Friday upgraded its fiscal 2021 earnings forecast after profit more than doubled in the first quarter on improved demand for farm and construction machines and a higher adoption rate for its technology offerings [see #msg-161353722].

The Moline, Illinois-based company now expects annual net income in the range of $4.6 billion to $5.0 billion higher than$3.6 billion-$4.0 billion forecast earlier [i.e. three months ago].

… 2021 is turning out to be the strongest season in years for the U.S. farm economy as prices for corn, soybeans and wheat have rallied to their highest levels in more than six years on rising demand from China and government efforts worldwide to build food stocks during the COVID-19 pandemic.

…Worldwide sales of the company's farm machines are forecast to increase by 26%-28% year-on-year.

The stock is trading within a hair of its all-time high.

[DewDiligence]

Informative discussion of DE in Barron’s: #msg-161353722.

[DewDiligence]

DE’s history of technology acquisitions is shown on slide #14.

[DewDiligence]

DE_hits_all-time_high_on_FY4Q20_results_and FY2021_guidance…

PR:
https://www.deere.com/assets/pdfs/common/our-company/news/deere-4q20-news-release.pdf

CC slides:
https://s22.q4cdn.com/253594569/files/doc_financials/2020/q4/4Q_2020_Earnings-Call-Presentation.pdf

FY2021 guidance for GAAP income is $3.6-4.0B, a whopping 31-45% increase versus FY2020.

DE is +3% in PM trading, which is an all-time high.

[DewDiligence]

DE already reported quarterly earnings on Aug 21.

[TFMG]

$DE | #DEERE Riding High into Earnings



Potential upside targets $200 - $202- $211
Expectations high and any disappointment could see the $175 level tested as support
Stock is starting to show some weakness on the indicators.
Wait and see approach on this one.

[whytestocks]

News; $DE Stocks Extend Gains, Dow Screams Higher

Stocks rose on Friday, lifted by strong U.S. economic data, to end a week that saw the broader market reach a record level. The Dow Jones Industrials leaped 190.6 points to close Friday and the week at 27,930.33. The S&P 500 strengthened 11.65 points at 3,397.16, yet another all-...

Read the whole news DE - Stocks Extend Gains, Dow Screams Higher

[whytestocks]

News; $DE Deere Reports Third Quarter Net Income of $811 Million

Deere Reports Third Quarter Net Income of $811 Million Canada NewsWire MOLINE, Ill., Aug. 21, 2020 Operating margins reach 14.6% helped by strong execution in face of global pandemic. Yearly net income forecast increased to about $2.25 billion. New operating model ...

Find out more DE - Deere Reports Third Quarter Net Income of $811 Million

[DewDiligence]

DE FY3Q20 results—raises FY2020 guidance substantially:

PR:
https://s22.q4cdn.com/253594569/files/doc_financials/2020/q3/3Q_2020_News-Release-and-Financials.pdf

CC slides:
https://s22.q4cdn.com/253594569/files/doc_financials/2020/q3/3Q_2020_Earnings-Call-Presentation.pdf

DE raised FY2020 GAAP EPS guidance to $7.12* from the prior guidance range of $5.06-6.33 given three months ago, when the fallout from COVID-19 was hard to quantify. (The new FY2020 guidance is still less than the original FY2020 guidance of $9.18 given in Nov 2019 and the $10.13 achieved in FY2019.)

As I’m typing, the stock is +5% to an all-time high.

*Based on 316M diluted shares.

[DewDiligence]

DE FY2Q20 items…

PR:
https://www.deere.com/assets/pdfs/common/our-company/news/deere-2q20-news-release.pdf

CC slides:
https://s22.q4cdn.com/253594569/files/doc_financials/2020/q2/2Q_2020_Earnings-Call-Presentation.pdf FY2Q20

FY2Q20 sales were -18% YoY in the ag segment (73% of equipment sales) and -25% YoY in the construction segment (27% of equipment sales), but these results were somewhat better than consensus estimates.

DE’s reinstated guidance for the full fiscal year (ending 10/31/20) is sharply down from the original guidance that was issued in Nov 2019 and then retracted due to COVID-19. Specifically, the new FY2020 guidance calls for $1.6-2.0B of net income (EPS of $5.05-6.31, based on 317M diluted shares), down from the $2.9B guidance given in Nov 2019 and the $3.2B net income actually achieved in FY2019.

The stock is +1% as I’m typing.

[DewDiligence]

DE FY2Q20 items…

PR:
https://www.deere.com/en/our-company/news-and-announcements/news-releases/2020/corporate/second-quarter-earnings/

CC slides:
https://s22.q4cdn.com/253594569/files/doc_financials/2020/q2/2Q_2020_Earnings-Call-Presentation.pdf


DE’s YoY sales fell 22% in the ag segment and 25% in the construction segment, but these results were somewhat better than consensus estimates.

DE’s reinstated guidance for the full fiscal year (ending 10/31/20) is sharply down from the original guidance that was issued in Nov 2019 and then retracted due to COVID-19. Specifically, the new FY2020 guidance calls for $1.8B of net income, down from the $2.9B guidance given in Nov 2019 and the $3.2B net income actually achieved in FY2019.

The stock is +4% in PM trading.

[DewDiligence]

DE was the best-performing stock in the S&P 500 today.

[DewDiligence]

DE—(+7%)—FY1Q20 results better than investors feared—see my comments at bottom...

PR:
https://www.deere.com/en/our-company/news-and-announcements/news-releases/2020/corporate/first-quarter-earnings/

CC slides:
https://s22.q4cdn.com/253594569/files/doc_financials/2020/q1/1Q_2020_Earnings-Call-Presentation.pdf

Bloomberg:
https://finance.yahoo.com/news/deere-reports-first-quarter-income-114500584.html

“Farmer confidence, though still subdued, has improved due in part to hopes for a relaxation of trade tensions and higher agricultural exports,” Chief Executive Officer John May said in a statement accompanying its fiscal first quarter results.

While the CEO didn’t mention the coronavirus in the statement, his comments may help ease concerns about how much the outbreak will delay China’s return to U.S. agricultural markets as laid out in the phase one trade deal. The tit-for-tat tariff spat with China made American farmers cautious on replacing large equipment, Deere’s top moneymaker.

…Deere maintained its fiscal 2020 [profit] guidance, forecasting a range of $2.7 billion to $3.1 billion.

DE’s PR says that business in the Construction Division, which comprises about 1/3 of corporate sales, how slowed somewhat. Nevertheless, business in the Construction Division can’t be really bad or DE would’ve lowered FY2020 guidance or at least guided toward the low end of the $2.7-3.1B range. Given my expectation for how Covid-19 would affect the global construction industry, I’m surprised that DE maintained prior guidance.

The (unchanged) FY2020 profit guidance equates to GAAP EPS of $8.57-9.84, an unusually wide range due to market uncertainties. This EPS range is [-14% to -1%] YOY on a comparable-tax basis, as explained in https://investorshub.advfn.com/boards/read_msg.aspx?message_id=152509594 .

[DewDiligence]

DE—(+7%)—FY1Q20 results better than investors feared—see my comments at bottom...

PR:
https://www.deere.com/en/our-company/news-and-announcements/news-releases/2020/corporate/first-quarter-earnings/

CC slides:
https://s22.q4cdn.com/253594569/files/doc_financials/2020/q1/1Q_2020_Earnings-Call-Presentation.pdf

Bloomberg:
https://finance.yahoo.com/news/deere-reports-first-quarter-income-114500584.html

“Farmer confidence, though still subdued, has improved due in part to hopes for a relaxation of trade tensions and higher agricultural exports,” Chief Executive Officer John May said in a statement accompanying its fiscal first quarter results.

While the CEO didn’t mention the coronavirus in the statement, his comments may help ease concerns about how much the outbreak will delay China’s return to U.S. agricultural markets as laid out in the phase one trade deal. The tit-for-tat tariff spat with China made American farmers cautious on replacing large equipment, Deere’s top moneymaker.

…Deere maintained its fiscal 2020 [profit] guidance, forecasting a range of $2.7 billion to $3.1 billion.

DE’s PR says that business in the Construction Division, which comprises about 1/3 of corporate sales, how slowed somewhat. Nevertheless, business in the Construction Division can’t be really[/] bad or DE would’ve lowered FY2020 guidance or at least guided toward the low end of the $2.7-3.1B range. Given my expectation for how Covid-19 would affect the global construction industry, I’m surprised that DE maintained prior guidance.

The (unchanged) FY2020 profit guidance equates to GAAP EPS of $8.57-9.84, an unusually wide range due to market uncertainties. This EPS range is [-14% to -1%] YOY on a comparable-tax basis, as explained in https://investorshub.advfn.com/boards/read_msg.aspx?message_id=152509594 .

[DewDiligence]

DE—(+7%)—FY1Q20 results better than investors feared—see my comments at bottom...

PR:
https://www.deere.com/en/our-company/news-and-announcements/news-releases/2020/corporate/first-quarter-earnings/

CC slides:
https://s22.q4cdn.com/253594569/files/doc_financials/2020/q1/1Q_2020_Earnings-Call-Presentation.pdf

Bloomberg:
https://finance.yahoo.com/news/deere-reports-first-quarter-income-114500584.html

“Farmer confidence, though still subdued, has improved due in part to hopes for a relaxation of trade tensions and higher agricultural exports,” Chief Executive Officer John May said in a statement accompanying its fiscal first quarter results.

While the CEO didn’t mention the coronavirus in the statement, his comments may help ease concerns about how much the outbreak will delay China’s return to U.S. agricultural markets as laid out in the phase one trade deal. The tit-for-tat tariff spat with China made American farmers cautious on replacing large equipment, Deere’s top moneymaker.

…Deere maintained its fiscal 2020 [profit] guidance, forecasting a range of $2.7 billion to $3.1 billion.

So, DE’s agriculture business is doing ok, but I thought Covid-19 would cause DE to lower guidance in its Construction Division, which comprises about 1/3 of corporate sales. I don’t understand why that didn’t happen.

The (unchanged) FY2020 profit guidance equates to GAAP EPS of $8.57-9.84, an unusually wide range due to market uncertainties. This EPS range is [-14% to -1%] YOY on a comparable-tax basis, as explained in https://investorshub.advfn.com/boards/read_msg.aspx?message_id=152509594 .

[DewDiligence]

DE -4%/PM on soft FY2020* outlook…

FY4Q19 PR:
https://s22.q4cdn.com/253594569/files/doc_financials/2019/q4/4Q_2019_News-Release-and-Financials.pdf

FY4Q19 CC slides:
https://s22.q4cdn.com/253594569/files/doc_financials/2019/q4/4Q_2019_Earnings-Call-Presentation.pdf

FY2019 full-year GAAP EPS was $10.15, slightly beating the (twice-lowered) guidance of $10.00 (#msg-150576031). In FY4Q19, agriculture-equipment comprised 66% of DE’s product sales, and construction/forestry equipment comprised 34%. (DE’s wholly-owned finance subsidiary is not consolidated for reporting sales.)

FY2020 guidance is for GAAP earnings of $2.7-3.1B, which equates to an (unusually wide) EPS range of $8.57-9.84 (based on 315 million diluted shares). This range is -16% to -3% relative to FY2019 GAAP EPS.

p.s. DE recently took advantage of ultra-low interest rates by raising $500M in 30-year debt at a rate of 2.875% (#msg-150925290)!

*Ending 10/31/20.

[giveit2me]

https://www.dailymail.co.uk/news/article-7592485/Father-eight-invents-electric-car-battery-drivers-1-500-miles-without-charging-it.html

https://beta.companieshouse.gov.uk/company/12219849/filing-history

https://www.metalectrique.com/

[TREND1]

DE CHART