Deere & Co Stock Buy Recommendation Reiterated (DE)

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 ( 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 revenue growth, notable return on equity, good cash flow from operations, growth in earnings per share 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:
  • The revenue growth came in higher than the industry average of 12.0%. Since the same quarter one year prior, revenues rose by 13.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • DEERE & CO has improved earnings per share by 8.0% 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 ($8.35 versus $7.64).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Machinery industry average. The net income increased by 2.7% when compared to the same quarter one year prior, going from $669.60 million to $687.60 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.
  • Net operating cash flow has increased to $2,303.10 million or 36.26% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 15.47%.

Deere & Company manufactures and distributes agriculture and turf equipment, and construction and forestry equipment worldwide. Deere has a market cap of $36.47 billion and is part of the industrial goods sector and industrial industry. The company has a P/E ratio of 12.3, below the S&P 500 P/E ratio of 17.7. Shares are up 8.7% 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.

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