Deere and Co (DE)

[DewDiligence]

DE acquiesces on “right to repair” issue:

https://finance.yahoo.com/news/1-farm-bureau-deere-co-165457932.html

The American Farm Bureau Federation and machinery manufacturer Deere & Co signed a memorandum of understanding on Sunday that ensures farmers have the right to repair their own farm equipment or go to an independent technician.

As the agriculture sector accelerates its adoption of technology, the reliance on high-tech machinery such as GPS-guided combines and tractors has become more commonplace.

But equipment makers such as Deere have generally required customers to use their parts and service divisions for repairs and until recently, only allowed authorized dealers the means and tools to access the complex computerized systems of their tractors and other machinery.

[DewDiligence]

USDA expects_record—($161B)—US_net farm income in_2022, +20% YoY:

https://www.wsj.com/articles/high-commodity-prices-feed-a-boom-in-the-u-s-farm-belt-11671595947

Bullish for DE. The more profit farmers earn, the more they spend on new equipment and technology services tied to that equipment.

[DewDiligence]

DE boosts annualized dividend to $4.80—(from $4.52):

https://finance.yahoo.com/news/deere-company-raises-dividend-six-190400945.html

At the current share price (~$440), the new payout is a yield of ~1.0%.

DE, which considers itself a technology growth company rather than an industrial cyclical, has never been a big dividend payer, but it has now boosted the dividend by a cumulative 33% ($3.60 to $4.80) in 2021 and 2022.

[DewDiligence]

(Rhetorical)

[DewDiligence]

Recession?

We now have DE’s blowout results and bullish guidance (#msg-170523741) to supplement CAT’s blowout results and bullish guidance (#msg-170300076).

Can these two bellwethers both be totally wrong?

[DewDiligence]

Addendum—DE’s FY4Q22 price increases more than offset increased production costs, and DE expects this to be true again during all of FY2023.

[MiamiGent]

DEERE & CO
$438.55 +21.90 (+5.28%)
As of Nov-23-202212:02:55 PM ET
https://stockcharts.com/h-sc/ui?s=DE

[DewDiligence]

DE FY4Q22* results…

In FQ4Q22, DE logged impressive volume and pricing gains in all three operating segments. The strong US dollar crimped ex-US sales, but this was scarcely noticeable in the overall picture.

PR:
https://www.sec.gov/Archives/edgar/data/315189/000155837022018162/de-20221123xex99d1.htm

CC slides:
https://investor.deere.com/files/doc_financials/2022/q4/DE-4Q22-Earnings-Call-Presentation.pdf


FY4Q22: Sales $15.5B, +37% YoY; GAAP EPS $7.44, +81% YoY.

FY2022 (12m): Sales $52.6B, +19% YoY; GAAP EPS $23.28, +23% YoY.

DE is today issusing guidance for FY2023* of $26.67-28.33 (based on 300M diluted shares), representing a YoY increase of 15-21%.

At the current share price (~$430), the above EPS range represents a FY2023 P/E ratio of 15-16.

*DE’s fiscal years end on Oct 31.

[MiamiGent]

DE Deere beats, top & bottom

EPS actual 7.44. Consensus 7.08
Revs actual 15.54B. Consensus 13.39B

https://stockcharts.com/h-sc/ui?s=DE

DEERE & CO
$416.56 +4.86 (+1.18%) Close

pre market hours active
Pre-market
$430.06 +13.50 (+3.24%)

[DewDiligence]

The stock was initially down about 4% in PM trading, but it is now flat. The CC started at 10am ET.

[DewDiligence]

FY3Q22 CC slides:

CC slides:
https://s22.q4cdn.com/253594569/files/doc_financials/2022/q3/DE-3Q22-Earnings-Call-Presentation.pdf

[DewDiligence]

DE FY3Q22* results—lowers FY2022* EPS guidance slightly…

https://s22.q4cdn.com/253594569/files/doc_financials/2022/q3/DE-3Q22-News-Release-and-Financials.pdf

DE experienced high-single-digit YoY inflation in raw materials and other cost-of-sales inputs, but more than offset these increases with ~10% price YoY increases.

New FY2022 GAAP EPS guidance is $22.95-23.60 (based on 305M diluted shares), down about $0.25 from the guidance three months ago at both the lower and higher bounds of the guidance range, but still up sharply from the guidance $20.70-22.30 nine months ago.

DE’s FY2022 GAAP guidance includes a $220M ($0.71/sh) non-recurring gain in FY2Q22; without thise non-recurring item, FY2022 EPS guidance would be $22.24-22.89. At the current share price (~$364), the above EPS range represents a FY2022 P/E ratio of 15.9-16.4.

*DE’s fiscal year ends on Oct 31.

[DewDiligence]

DE FY3Q22 earnings preview (Reuters):

https://finance.yahoo.com/news/deeres-sales-expected-rise-increased-201802171.html

[Lowjack]

By sustainable, do you mean shipping jobs to Mexico, or failing to provide parts and tools to repair their equipment?

[DewDiligence]

DE’s 2021 Sustainability Report:

https://www.deere.com/en/our-company/sustainability/sustainability-report/

[Canna_Business]

Does this company focus on soil revitalization?

[DewDiligence]

DE’s technology/autonomy webcast:

https://investor.deere.com/home/default.aspx#analyst

If the data depict some kind of “edge” condition, the vehicle is simply stopped, an option not available with robocars!

[DewDiligence]

DE raises annualized dividend to $4.52 (from $4.20):

https://www.sec.gov/Archives/edgar/data/0000315189/000155837022009334/de-20220525xex99d1.htm

At the current share price (~$340), the new annualized payout represents a yield of 1.3%.

DE has never been a high-dividend payer, but it increases the dividend often. Today’s increase is the third in the past 15 months.

[DewDiligence]

DE raises FY2022* EPS guidance again…

FY2Q22 PR:
https://s22.q4cdn.com/253594569/files/doc_financials/2022/q2/DE-2Q22-News-Release-and-Financials.pdf

CC slides:
https://s22.q4cdn.com/253594569/files/doc_financials/2022/q2/DE-2Q22-Earnings-Call-Presentation.pdf


New FY2022 GAAP EPS guidance is $22.73-24.03 (based on 308M diluted shares), up from the prior guidance of $21.30-22.60 three months ago and up further from the prior guidance $20.70-22.30 six months ago.

DE’s FY2022 GAAP guidance includes a $220M ($0.71/sh) non-recurring gain in FY2Q22; without the non-recurring item, FY2022 EPS guidance would be $22.02-23.32. At the current share price (~$337), the above EPS range represents a FY2022 P/E ratio of 14.5-15.3.

Despite all of the above, the stock is down ~7% as I’m typing. Some investors may think that FY022 represents the top of the cycle and that things can’t get any better.

*DE’s fiscal year ends on Oct 31.

[Bountiful_Harvest]

New John Deere Tractors Plow Day and Night With No One in the Cab: Autonomous Farming Debuts in 2022:

https://www.goodnewsnetwork.org/new-john-deere-autonomous-farming-tractors-debut-in-2022/

[Bountiful_Harvest]

https://kutv.com/features/fresh-living/how-john-deere-is-supporting-modern-farmers

[DewDiligence]

Another write-up on DE’s amazing run:

https://finance.yahoo.com/news/deere-soars-ukraine-war-stokes-164402006.html

The sharp rally in the shares since the beginning of Russia’s invasion of Ukraine nearly a month ago has led to a 25% gain this year, making Deere the top gainer in the 72-member S&P 500 Industrials Index.

…Prices of crops such as wheat and soybeans have soared in recent weeks amid fear of looming disruption for crop supplies from Ukraine. …As a result, some estimate that Ukraine, which is a major exporter of wheat, corn and sunflower oil, may only plant about half a normal sunflower crop and a third less corn than last year. That reduced production will invariably cause prices to rise.

Rising grain prices, however, is typically good news for farmers and farm incomes. And that, in turn, is good for agriculture machinery makers like Deere and AGCO Corp.

…On the other hand, the gaps in the global crop supply created by the loss of the production capacity of Russia and Ukraine will also need to be filled. All together, it creates the perfect environment for a significant uptick in demand for farm equipment.

[DewDiligence]

DE suspends shipments to Russia/Belarus:

https://finance.yahoo.com/news/deere-co-suspends-shipments-russia-193710522.html

Deere & Co. has had a presence in Russia dating back to 1973. The company has an office in St. Petersburg and a manufacturing and parts distribution facility south of Moscow in Domodedovo.

[DewDiligence]

The dissolution of the Deere-Hitachi JV has finally closed:

https://finance.yahoo.com/news/john-deere-acquires-deere-hitachi-220000657.html

[DewDiligence]

DE raises FY2022* profit guidance despite headwinds…

FY1Q22 PR:
https://www.deere.com/en/news/all-news/fy22-first-quarter-earnings/

CC slides:
https://investor.deere.com/files/doc_financials/2022/q1/DE-1Q22-Earnings-Call-Presentation.pdf

New FY2022 GAAP EPS guidance is $21.30-22.60 (based on 314M diluted shares), up from the prior guidance of $20.70-22.30 three months ago.

*DE’s fiscal year ends on Oct 31.

[Bountiful_Harvest]

Is John Deere an Underrated AI Stock?

https://www.fool.com/investing/2022/01/28/is-john-deere-an-underrated-ai-stock/

[DewDiligence]

A glaring shortcoming of the Barron’s excerpt I just posted is:

#msg-167521140

[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?