DE - Embedded Expectations Analysis - 2020 02 14
ï€ Deere & Company (DE:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with an 18.3x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about agriculture market declines, inventory levels, and their acquisition of Wirtgenï€ Specifically, management may be downplaying concerns about the impact of their model changeover on production, losses in their lease portfolio, and declines in the large agriculture market. Moreover, they may lack confidence in their ability to match inventory levels to customer demand, and they may be exaggerating the quality of the integration and amount of synergy opportunities with Wirtgen. Finally, they may be concerned about flat turf and utility equipment sales in the US, macroeconomic uncertainty, and the potential of further adverse weather conditions
Deere & Co. operates the following segments: Agriculture and Turf, which manufactures and distributes a line of agriculture and turf equipment and related service parts, including utility tractors, tractor loaders, combines, cotton pickers, cotton strippers, and sugarcane harvesters; Construction and Forestry, which manufactures and distributes a range of machines and service parts used in construction, earthmoving, road building, material handling and timber harvesting, including backhoe loaders and crawler dozers and loaders; and Financial Services, which finances sales and leases by the company's dealers of new and used agriculture and turf equipment and construction and forestry equipment.
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