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 B. 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 net income and increase in stock price during the past year. 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:
- The revenue growth greatly exceeded the industry average of 21.9%. Since the same quarter one year prior, revenues slightly increased by 9.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- DEERE & CO has improved earnings per share by 26.9% 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 $7.64 versus $6.63 in the prior year. This year, the market expects an improvement in earnings ($8.55 versus $7.64).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 21.9% when compared to the same quarter one year prior, going from $532.90 million to $649.70 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.
Deere & Company manufactures and distributes agriculture and turf equipment, and construction and forestry equipment worldwide. Deere has a market cap of $33.5 billion and is part of the industrial goods sector and industrial industry. The company has a P/E ratio of 11.00, below the S&P 500 P/E ratio of 18.00. Shares are down 1.1% year to date as of the close of trading on Friday.
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--Written by a member of TheStreet Ratings Staff.
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