Replies to post #337 on Deere and Co (DE)

[DewDiligence]

DE’s own FY1Q21 PR:

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

[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]

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

Bullish for CLF.

[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]

DE FY2Q21 earnings on 5/21/21:

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

[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