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Deere & Company (NYSE:DE): Poised For Long Term Success?

Simply Wall St

As Deere & Company (NYSE:DE) announced its earnings release on 28 July 2019, analysts seem fairly confident, with earnings expected to grow by 4.0% in the upcoming year against the past 5-year average growth rate of 0.9%. With trailing-twelve-month net income at current levels of US$2.4b, we should see this rise to US$2.5b in 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.

Check out our latest analysis for Deere

What can we expect from Deere in the longer term?

The longer term expectations from the 15 analysts of DE is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

NYSE:DE Past and Future Earnings, August 18th 2019

This results in an annual growth rate of 9.1% based on the most recent earnings level of US$2.4b to the final forecast of US$3.1b by 2022. EPS reaches $15.38 in the final year of forecast compared to the current $7.34 EPS today. In 2022, DE's profit margin will have expanded from 6.3% to 8.8%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Deere, I've put together three fundamental factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Deere worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Deere is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Deere? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.