Deere & Co Stock Buy Recommendation Reiterated (DE)

NEW YORK (TheStreet) -- Deere (NYSE:DE) has been reiterated by TheStreet Ratings as a buy with a ratings score of A. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth, notable return on equity and compelling growth in net income. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated.

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Highlights from the ratings report include:

• DEERE & CO has improved earnings per share by 23.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DEERE & CO increased its bottom line by earning $6.63 versus $4.36 in the prior year. This year, the market expects an improvement in earnings ($8.25 versus $6.63).
• Despite its growing revenue, the company underperformed as compared with the industry average of 16.4%. Since the same quarter one year prior, revenues rose by 12.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
• Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Machinery industry and the overall market, DEERE & CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
• The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Machinery industry average. The net income increased by 16.8% when compared to the same quarter one year prior, going from $904.40 million to $1,056.20 million.
• The gross profit margin for DEERE & CO is currently lower than what is desirable, coming in at 32.80%. Regardless of DE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, DE's net profit margin of 10.60% compares favorably to the industry average.

Deere & Company provides products and services primarily for agriculture and forestry worldwide. The company has a P/E ratio of 10.5, equal to the average industrial industry P/E ratioand below the S&P 500 P/E ratio of 17.7. Deere has a market cap of $30.2 billion and is part of the industrial goods sector and industrial industry. Shares are down 2.2% year to date as of the close of trading on Wednesday.

You can view the full Deere Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

 

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