QUOTE AND NEWS
Motley Fool  Oct 17  Comment 
Which is the better dividend stock: Caterpillar or Deere? Let's dig beyond just their current yields and find out.
Market Intelligence Center  Oct 16  Comment 
MarketIntelligenceCenter.com's patented algorithms have identified an attractive covered-call trade on Deere & Co (DE). Look at the Dec. '14 $82.50 covered call for a net debit in the $80.08 area. This trade has a duration of 65 days. The...
SeekingAlpha  Oct 15  Comment 
By Search4Value: Deere & Company (NYSE:DE) is an American corporation, and manufactures agricultural, construction and forestry machinery, diesel engines, drivetrains used in heavy equipment and lawn care equipment. The following graph...
SeekingAlpha  Oct 14  Comment 
By IAEResearch: Deere and Company (NYSE:DE), along with its peers in the market, have had a tough time coping with weaker demand for agricultural machinery this year. Due to lower revenues and foggy future prospects, the stock lost about 10%...
Yahoo  Oct 8  Comment 
Chris Gould's combine cab is loaded like the cockpit of a fighter jet he used to fly as he harvests soybeans in northern Illinois, steered by satellites, four video screens glowing with up to minute updates about his crop and the work's progress....
TheStreet.com  Oct 7  Comment 
NEW YORK (TheStreet) -- Shares ofaDeere awere falling 2% to $81.21 Tuesday after Bank of America/Merrill Lynch downgraded the farm equipment maker to "underperform" from "neutral." The analyst firm also lowered its price target for the company...
SeekingAlpha  Oct 3  Comment 
By Michael Rivers: John Deere has exhibited good, but not great, operating and net margins over the last 20 years relative to the average industrial company Deere has, however, produced above average returns on capital employed (that edge...
Benzinga  Oct 1  Comment 
Deere & Company (NYSE: DE) today announced changes to its senior leadership team that will take place after the retirement of James A. Israel, president of John Deere Financial - the company's global financial services division headquartered in...
TheStreet.com  Sep 29  Comment 
Story updated at 9:50 a.m. to reflect market activity. NEW YORK (TheStreet) --aCredit Suisse lowered its price target for Deere to $95 from $98 Monday, reiterating its "outperform" rating. Shares of Deere fell 0.7% to $82.29 in morning...
Benzinga  Sep 29  Comment 
In a report published Monday, Credit Suisse analyst Jamie Cook reiterated an Outperform rating on Deere & Company (NYSE: DE), but lowered the stock's price target from $98.00 to $95.00. In the report, Credit Suisse noted, “We attended DE's...




RELATED WIKI ARTICLES
 

Deere & Company (NYSE: DE) is the world's leading manufacturer of agricultural and forestry equipment by revenue. [1][2] The company also produces equipment used for construction, residential lawn care, commercial landscaping, and other consumer and commercial heavy equipment products. Perhaps best known by consumers for their lawn tractors, Deere's products also include harvesters, excavators, loaders, industrial sprayers, and utility vehicles.

Approximately 50% of Deere's revenue comes from sales of agricultural equipment.[3] Consequently, much of Deere's success hinges upon the success of the agriculture industry and crop prices. Increased research in renewable energy sources that use ethanol, a chemical material typically derived from corn will benefit Deere. Ethanol-based energy research and development over the next several years could cause a large growth in corn prices, leading to higher agricultural activity which would increase Deere's sales of farm equipment.

Business Overview

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Deere & Company is one of the world's largest manufacturer of heavy machinery and is the leading producer of agricultural and forestry equipment. In addition to designing and manufacturing equipment, the company has a network of dealers and distributors that sell its equipment and utilize Deere's parts network. Also, Deere has an in-house credit department that allows customers to finance their purchases directly through Deere. The company is divided into four business segments:

Agricultural Equipment: This segment develops and manufactures farming equipment such as tractors, harvesters, balers, sprayers, utility vehicles and other machines. Deere is the world's leading producer of agricultural equipment.

Construction & Forestry Equipment: This segment is responsible for construction equipment such as excavators, bulldozers, and dump trucks as well as forestry equipment that includes feller bunchers, skidders, and knuckleboom loaders. Deere is the world's largest producer of forestry equipment.

Commercial & Consumer Equipment: This segment produces commercial and consumer landscaping equipment such as mowers, tractors, trimmers and other lawn care machinery. Deere also makes landscaping equipment designed for use on golf courses.

Financial Services: Deere's financial services department provides clients with the opportunity to finance their purchases. Deere's financial services segment operates at a very high margin, contributing to only 8% of total revenue, but over 20% of total operating income.

Quarterly and Annual Earnings

Q1 FY 2011 Quarterly Earnings

Deere & Company doubled for the first quarter of 2011 when compared to fiscal earnings in the first quarter of 2010.[4] Driving this increase in income was a 27% increase in net sales and revenues globally.[4] These were similarly driven by an overall increase in the demand for farm machinery and a generally favorable climate for construction.[4] Net income totaled $513.7 million for the quarter as compared to $243.2 million in Q1FY2010.[4]

FY 2010 Annual Earnings

Deere & Company posted net income of $457.2 million for the fourth quarter of 2010, an increase from a loss of $322.8 million in the fourth quarter of 2009.[5] Fourth quarter net income translated to earnings of $99.0 million for the quarter.[5] Net sales and revenues increased by 35% and culminated at $7.202 billion and were a Deere & Company quarterly earnings record.[5] Driving this growth was a quarterly increase in the net sales of equipment operations, increasing from $4.726 in Q4 FY2009 to $6.564 in Q4 FY2010.[5] Deere saw increases for its yearly earnings as well, increasing from $873.5 million in FY2009 to $1.865 billion in FY2010.[5]

Trends and Forces

Biofuels Research Will Impact Sales Levels

Deere's agricultural equipment sector will prosper if the nation has to harvest massive amounts of corn or soybeans to fuel its vehicles. It takes about 21 pounds of corn to make 1 gallon of ethanol, which would mean much more demand for Deere's tractors if corn based ethanol took off.

People only consume biofuels, it seems, when gas prices are extremely high. Ethanol is about 15-20% less efficient than gasoline, and studies have shown it needs to be about 40 cents cheaper per gallon to compete. [6] This implies that gas prices need to be relatively high for Deere to benefit from the biofuel trend.

The Strength of the Housing Market Directly Impacts Deere's Sales and Operations

The US housing market is highly influential upon Deere's revenue, particularly in its Commercial & Consumer Equipment segment. Most sales from this segment come from sales of lawn tractors, mowers, and other landscaping and yardwork equipment. When the housing market thrives, consumers purchase and commission the construction of new homes, and many decide to purchase lawn mowers to care for their own yards or hire landscaping services.

When the housing market heats up, Deere sells more equipment and generates more revenue and profit. When the housing market falters, consumers cut back on unnecessary expenditures such as landscaping services and are less likely to make relatively large purchases such as mowers and other lawn care machinery, the prices for which can reach into the thousands of dollars.

Deere's Performance will be Reliant upon its Ability to Capitalize on Emerging Markets

Internationally, Deere has been attempting to gain a stronger presence in markets throughout Western Europe where it faces stiff competition from CNH Global N.V. (CNH) and AGCO (AG) . Deere is also working to establish itself more firmly in emerging markets such as Brazil, India, China, and Russia.

Last year, Deere took steps towards enhancing its presence in these nations through building factories in Brazil and China, a technical and engineering center in India, and by solidifying its distribution and support network throughout Russia.

Deere is very well poised to benefit from the increased demand for its products from these emerging economies. Everything from its construction equipment used to build roads and cities to lawn tractors used in the backyards of newly built homes, would likely see increased sales. Thus, if Deere can successfully insert itself into these markets and use its size and brand reputation to compete with other manufacturers, Deere will experience significantly increased revenues in years to come.

Competition

Deere operates in several industries, and competes with major players within those industries. It primarily competes in the Tractors and Agricultural Machinery market along with Caterpillar (CAT), AGCO (AG), FIAT S.p.A. (F-MI), and Kubota (KUB). Caterpillar and Deere are the major players in the US markets. [7] Deere has more definitive dominance in Wholesale Farm, Lawn and Garden equipment within the United States, though it is a very fragmented market. Its major publicly traded competitors include CNH Global N.V. (CNH), Kubota (KUB), AGCO (AG).[7]

Finally, Deere competes in the construction machinery area, where it loses quite definitively to Caterpillar. It also competes with CNH Global N.V. (CNH), Komatsu, Terex (TEX), and a large number of private companies.[7]

References

  1. stock:Deere_&_Company_(DE)/Filing/10-K/2008/F3465691 DE 10-K Report, 2008
  2. stock:Deere_&_Company_(DE)/Filing/10-K/2009/F47088201 Fourth Quarter 2009 Reports
  3. Deere & Co. 10-K Annual Report 2009
  4. 4.0 4.1 4.2 4.3 | Deere Reports First Quarter Annual Earnings
  5. 5.0 5.1 5.2 5.3 5.4 Deere Announces Fourth Quarter Earnings
  6. [http://news.yahoo.com/s/ap/20090714/ap_on_re_ca/us_farm_scene_e85_outlook | Yahoo News: Massive Ethanol Decrease in 2009]
  7. 7.0 7.1 7.2 [ http://www.reuters.com/finance/stocks/overview?symbol=DE.N |Reuters Research]
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