Will Deere (DE) Stock Rise After Expanding Precision Planters Portfolio?
NEW YORK (TheStreet) -- Deere & Co. (DE) - Get Report agreed to acquire the Precision Planting equipment manufacturing business from Monsanto Co. (MON) subsidiary The Climate Corp. for an undisclosed amount.
The company also agreed to collaborate with Climate to enable near real-time data to be sent from certain John Deere farming equipment to the Climate FieldView platform, which combines weather data with agronomic modeling to improve farming operations.
Climate will maintain Precision Planting's digital agriculture portfolio that is also integrated into FieldView.
"This strategic acquisition expands the John Deere precision agriculture business and accelerates our momentum as a market leader," Deere chief information officer John May said in a statement.
The acquisition of Precision Planting is Deere's second acquisition of a precision planter manufacturer this week.
On Monday, the company agreed to acquire Monosem, a European manufacturer of precision planters with four facilities in France and two in the U.S. Terms were not disclosed.
Deere stock is falling 0.36% to $79.90 in afternoon trading on Tuesday.
Separately, TheStreet Ratings team rates DEERE & CO as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate DEERE & CO (DE) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 20.3%. Since the same quarter one year prior, revenues fell by 20.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Machinery industry and the overall market, DEERE & CO's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Net operating cash flow has decreased to $1,346.50 million or 11.06% when compared to the same quarter last year. Despite a decrease in cash flow DEERE & CO is still fairing well by exceeding its industry average cash flow growth rate of -32.09%.
- The debt-to-equity ratio is very high at 4.81 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- The gross profit margin for DEERE & CO is currently lower than what is desirable, coming in at 31.06%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.73% trails that of the industry average.
- You can view the full analysis from the report here: DE