Deere & Company (NYSE:) designs, manufactures, and distributes agricultural and construction equipment worldwide.

The stock is a good investment for me. (See Insiders’ Hot Stocks on TipRanks)

Latest Developments

Deere has experienced a period of regrowth due to the rise in artificial intelligence and precision agriculture.

This firm is focusing on automating construction and farming. This company has significant cash reserves that could be used for research and development.

Deere is also ready to benefit from the equipment upgrading cycle. Over the last seven years there has been a more than 60% drop in equipment inventories. Additionally, rising equipment prices indicate a need to upgrade equipment. Deere may be able to benefit from this.

Guidance and Earnings

Deere beat the Q3 earnings forecasts as sales rose by 29% annually. The three primary segments driving sales in Q3 were Precision Agriculture (up 29%), Small Agriculture & Turf (up 32%), and Construction & Forestry (up 38%).

Company also updated its full-year guidance, anticipating earnings of between $5.7 billion to $5.9 billion, as opposed to previous estimates of $5.3 million.

The Key Metrics

Diluted EPS have grown by 100.9% over the past year and are expected to grow an additional 33% per year for the next three to five years. Combining this statistic with the stock’s current P/E (19.6) which is 12.4% below its average five-year growth rate and its PEG (0.2), we can conclude that it is an undervalued stock.

Many may be worried about the company’s 307.3% leverage, but its interest-coverage ratio of 2.9 suggests the debt burden isn’t a problem at all.

Wall Street Take

Wall Street believes the stock is a moderate buy, with three Buys and one Hold assigned over the last three months.

Average Deere target price of $407.20 indicates 18.4% potential upside.

Disclosure: Steve Gray Booyens had no position in the securities listed in this article at the time it was published.

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