In 1986 Berkshire Hathaway Shareholder Letter, Warren Buffett defined owner earnings as follows:
"These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges...less (c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume (If the business requires additional working capital to maintain its competitive position and unit volume, the increment also should be included in (c))...Our owner-earnings equation does not yield the deceptively precise figures provided by GAAP, since (c) must be a guess - and one sometimes very difficult to make. Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes - both for investors in buying stocks and for managers in buying entire businesses...All of this points up the absurdity of the 'cash flow' numbers that are often set forth in Wall Street reports. These numbers routinely include (a) plus (b) - but do not subtract (c)."
Deere's Owner Earnings per Share (TTM) ended in Jan. 2022 was $8.42. It's Price-to-Owner-Earnings ratio for today is 43.79.
The historical rank and industry rank for Deere's Owner Earnings per Share (TTM) or its related term are showing as below:
DE'
s Price-to-Owner-Earnings Range Over the Past 10 Years
Min: 12.21 Med: 22.52 Max: 253.49
Current: 43.8
During the past 13 years, the highest Price-to-Owner-Earnings ratio of Deere was 253.49. The lowest was 12.21. And the median was 22.52.
Deere's Earnings per Share (Diluted) for the
three
months ended in Jan. 2022 was $2.92.
Its Earnings per Share (Diluted) for the trailing twelve months (TTM) ended in Jan. 2022 was $18.04. It's PE Ratio ratio for today is 20.44.
Deere's EPS without NRI for the
three
months ended in Jan. 2022 was $2.92.
Its EPS without NRI for the trailing twelve months (TTM) ended in Jan. 2022 was $18.04. It's PE Ratio without NRI ratio for today is 20.44.
Deere Owner Earnings per Share (TTM) Historical Data
The historical data trend for Deere's Owner Earnings per Share (TTM) can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
|
Deere Annual Data
|
|
Trend |
Oct12 |
Oct13 |
Oct14 |
Oct15 |
Oct16 |
Oct17 |
Oct18 |
Oct19 |
Oct20 |
Oct21 |
| Owner Earnings per Share (TTM) |
|
|
|
|
|
|
0.65 |
-2.73 |
0.92 |
12.49 |
16.95 |
|
Deere Quarterly Data
|
|
Apr17 |
Jul17 |
Oct17 |
Jan18 |
Apr18 |
Jul18 |
Oct18 |
Jan19 |
Apr19 |
Jul19 |
Oct19 |
Jan20 |
Apr20 |
Jul20 |
Oct20 |
Jan21 |
Apr21 |
Jul21 |
Oct21 |
Jan22 |
| Owner Earnings per Share (TTM) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.26 |
17.63 |
15.83 |
16.95 |
8.42 |
Competitive Comparison
For the Farm & Heavy Construction Machinery subindustry, Deere's Owner Earnings per Share (TTM), along with its competitors' market caps and Owner Earnings per Share (TTM) data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Deere Owner Earnings per Share (TTM) Distribution
For the Farm & Heavy Construction Machinery industry and Industrials sector, Deere's Owner Earnings per Share (TTM) distribution charts can be found below:
* The bar in red indicates where Deere's Owner Earnings per Share (TTM) falls into.
Deere Owner Earnings per Share (TTM) Calculation
In 1986 Berkshire Hathaway Shareholder Letter, Warren Buffett defined owner earnings as follows:
"These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges...less (c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume. (If the business requires additional working capital to maintain its competitive position and unit volume, the increment also should be included in (c))...Our owner-earnings equation does not yield the deceptively precise figures provided by GAAP, since (c) must be a guess - and one sometimes very difficult to make. Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes - both for investors in buying stocks and for managers in buying entire businesses...All of this points up the absurdity of the 'cash flow' numbers that are often set forth in Wall Street reports. These numbers routinely include (a) plus (b) - but do not subtract (c)."
To make it simple, then you will have:
Owner Earnings per Share (TTM) = (Net Income + Depreciation, Depletion and Amortization + Change In Deferred Tax - 5Y Average of Maintenance Capital Expenditure + Change In Working Capital) / Shares Outstanding (Diluted Average)
Deere's Owner Earnings per Share (TTM) Calculation:
1. Start with "Net Income" from income statement. Deere's Net Income for the trailing twelve months (TTM) ended in Jan. 2022 was $5,643 Mil.
2. "Depreciation, Depletion and Amortization" is from cashflow statement. Deere's Depreciation, Depletion and Amortization for the trailing twelve months (TTM) ended in Jan. 2022 was $1,998 Mil. This needs to be added back because company does not actually need to pay cash for it. It is a non-cash item.
3. Other non-cash charges usually include "Stock Based Compensation" and "Change In Deferred Tax":
However, to be conservative, GuruFocus will not add Stock Based Compensation back to net income.
Deere's Change In Deferred Tax for the trailing twelve months (TTM) ended in Jan. 2022 was $-193 Mil.
4. Average maintenance capital expenditure over a business/industry cycle: 5-Year Average Maintenance Capital Expenditure = $2,701 Mil
It is usually best to take a long-term average of maintenance capital expenditure. Ideally this would be as long as 10 years and include at least one economic downturn. However, since many companies do not have as long as 10-year history, here GuruFocus uses the latest 5 years data to do the calculation. To smooth out unusual years but reflect recent developments, we take an average of the 5 year maintenance capital expenditure.
The following shows how to get maintenance capital expenditure.
First, calculate the revenue change regarding to the previous year. If the revenue decreased from the previous year, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
Second, if the revenue increased from the previous year, then calculate the percentage of Net PPE as of corresponding Revenue.
Growth Capital Expenditure = Percentage of Property, Plant and Equipment as of corresponding Revenue * Revenue Increase
Third, calculate Capital Expenditure (positive) - Growth Capital Expenditure.
If [Capital Expenditure (positive) - Growth Capital Expenditure] was negative, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
If [Capital Expenditure (positive) - Growth Capital Expenditure] was positive, then the Maintenance Capital Expenditure = Capital Expenditure (positive) - Growth Capital Expenditure.
Fourth, get the average of the 5 years maintenance capital expenditure.
Deere's 5-Year Average Maintenance Capital Expenditure = $2,701 Mil
5. "Change In Working Capital" is from cashflow statement. Deere's Change In Working Capital for the trailing twelve months (TTM) ended in Jan. 2022 was $-2,143 Mil.
Note: GuruFocus' Change in Working Capital is provided by Morningstar. It is calculated by adding the items under "Change in operating assets and liabilities" (may refer to a different name for different company) section in Cash Flow Statement from original financial report. And sometimes it includes non-current parts of assets and liabilities.
6. Deere's Shares Outstanding (Diluted Average) for the
months ended in Jan. 2022 was 309.400 Mil.
Deere's Onwer Earnings Per Share for Jan. 2022 is calculated as:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
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