Deere & Company has a rich history of over 180 years. Founded initially as a steel plow manufacturing company, the Company has experienced significant growth. Today, Deere & Company is a multinational corporation headquartered in Moline, Illinois, and operates in various market segments, including Agriculture and Lawn Care, Construction and Forestry, and Irrigation Systems.
The corporate structure of Deere & Company is based on a global network of subsidiaries and joint ventures that allow it to serve customers worldwide. Additionally, the Company has established a strong presence in different markets, with operations in North America, Latin America, Europe, Asia, and Africa.
Deere & Company offers a wide range of products and services that span multiple industries. In the agricultural sector, the Company is known for its tractors, harvesters, planters, sprayers, and other agricultural equipment. These products help farmers increase productivity and efficiency in their operations.
In the construction and forestry sector, Deere & Company manufactures various heavy equipment, such as excavators, loaders, backhoes, and cranes, which are used in construction projects and forestry operations. These equipment are recognized for their durability and performance in demanding conditions.
Furthermore, Deere & Company also provides lawn care equipment and irrigation systems for residential, commercial, and institutional use. These products include lawnmowers, garden tractors, sprinkler irrigation systems, and golf course maintenance equipment.
Deere & Company has adopted several business strategies to drive its growth and maintain its leadership position in the industry. One of the Company’s key strategies is continuous innovation. Deere & Company invests significantly in research and development to create new products and advanced technologies that enhance the efficiency and sustainability of its equipment.
The Company has also expanded its global presence through strategic acquisitions and partnerships. These actions have allowed it to enter new markets and diversify its product portfolio. Deere & Company has also developed digital solutions and data-based services to provide more excellent value to its customers, such as predictive maintenance programs and fleet management tools.
Regarding its current financial situation, Deere & Company’s financial results have shown consistency in recent years regarding its revenues. In the latest financial report for the second quarter of 2023, the Company reported revenues of $15.5 billion, representing a 12% increase compared to the same period the previous year, where they reported revenues of $13.8 billion. However, when comparing revenues over the past few years, representing an average annual increase of 11.19% since 2019, this is a highly positive indicator of sustained revenue growth in recent years.
As for net income, the Company reported a profit of $2.9 billion for the second quarter of 2023, representing a 58% increase compared to the same period the previous year, when they reported net income of $1.8 billion. But when comparing its net income since 2019, we see an average annual growth rate of 58%, which is highly favorable for the Company, as it has maintained growth in both its revenues and net income, which is very positive for a company with a long track record.
Analyzing the Company’s financial ratios, we find relevant information. Firstly, we observe profitability ratios, with an ROI of 11%, which is very important for a well-established company. In addition, it generates a return on assets (ROA) of 10.50% and creates value for its shareholders with a return on equity (ROE) of 46.20%. On the other hand, we have debt ratios that are slightly elevated due to the debt issuances by the Company, which do not pose an operational risk to the Company due to its financial strength and cash flow capacity.
Finally, two interesting points to consider for investment decisions are that dividends yield 1.31% per year, which will help reduce the long-term holding risk of the stock. Secondly, it has a beta of 1.08, indicating that the store has medium-low volatility, which is ideal for risk diversification in our investment portfolio.
To complement our fundamental analysis, we must analyze the stock price chart to observe sustained price growth, which helps instill more confidence when considering an extended position. Additionally, we have three critical zones for Deere’s price. The first level is a support level of around 320.92; the other point closer to the current price is support at 395.21, where it is currently a great investment opportunity as it has recently rebounded from that level.
We could take a long position and place a stop loss just below that zone. The last critical level is the price resistance around 447.40, which has rejected the price on three occasions in the past, making it significant. If the price approaches this zone, we should wait for a breakout with confirmation before considering the cost to continue its upward trajectory.
Deere & Company is a great investment opportunity in heavy equipment and agricultural machinery. Through its strong history, global corporate structure, and innovative business strategies, the Company has demonstrated its ability to adapt to market changes and maintain its leadership position.
Deere & Company has a comprehensive product portfolio from agricultural equipment to construction machinery and lawn care. Its focus on innovation and advanced technology, such as precision agriculture and digitization, gives it a competitive advantage in an ever-evolving business environment.
Furthermore, the growing global demand for food and the need to enhance agricultural efficiency support Deere & Company’s positive outlook. The Company is well-positioned to capitalize on this demand through its expertise, research and development capabilities, and commitment to sustainability.
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