Deere & Co (DE, Financial), a leading manufacturer of agricultural equipment, has recently experienced a daily stock loss of -4.54%, yet it boasts a 3-month gain of 8.7%. With an Earnings Per Share (EPS) of 29.8, it poses the question: is the stock modestly undervalued? This article provides a comprehensive valuation analysis of Deere (DE), encouraging readers to delve into the following analysis.
Company Introduction
Deere is the world's leading manufacturer of agricultural equipment, producing some of the most recognizable machines in the heavy machinery industry. The company operates through four reportable segments: production and precision agriculture, small agriculture and turf, construction and forestry, and John Deere Capital. Its products are available through an extensive dealer network, which includes over 2,000 dealer locations in North America and approximately 3,700 locations globally. John Deere Capital provides retail financing for machinery to its customers, in addition to wholesale financing for dealers, which increases the likelihood of Deere product sales.
Comparing the stock price of $400.12 to the GF Value of $500.2, an estimation of fair value, indicates that Deere may be modestly undervalued. This sets the stage for a deeper exploration of the company's value, ingeniously integrating financial assessment with essential company details.
Understanding the GF Value
The GF Value represents the current intrinsic value of a stock derived from our exclusive method. The GF Value Line on our summary page provides an overview of the fair value that the stock should ideally trade at. This value is calculated based on three factors:
- Historical multiples (PE Ratio, PS Ratio, PB Ratio and Price-to-Free-Cash-Flow) that the stock has traded at.
- GuruFocus adjustment factor based on the company's past returns and growth.
- Future estimates of the business performance.
Our analysis shows that Deere (DE, Financial) appears to be modestly undervalued based on these factors. If the share price is significantly above the GF Value Line, the stock may be overvalued and have poor future returns. On the other hand, if the share price is significantly below the GF Value calculation, the stock may be undervalued and have higher future returns. Given Deere's current price of $400.12 per share, it shows signs of being modestly undervalued. As a result, the long-term return of its stock is likely to be higher than its business growth.
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