Editor's Note: 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.
NEW YORK (
) 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 revenue growth, notable return on equity, impressive record of earnings per share growth, increase in stock price during the past year and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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Highlights from the ratings report include:
- DE's revenue growth has slightly outpaced the industry average of 10.3%. Since the same quarter one year prior, revenues rose by 14.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- DEERE & CO has improved earnings per share by 17.1% 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 ($7.76 versus $6.63).
- 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 stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Machinery industry average, but is greater than that of the S&P 500. The net income increased by 10.6% when compared to the same quarter one year prior, going from $712.20 million to $788.00 million.
Deere & Company provides products and services primarily for agriculture and forestry worldwide. The company has a P/E ratio of 11.1, equal to the average industrial industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Deere has a market cap of $32.49 billion and is part of the
industry. Shares are up 5.6% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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