How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Deere (
DE Quick Quote DE - Free Report) ten years ago? It may not have been easy to hold on to DE for all that time, but if you did, how much would your investment be worth today? Deere's Business In-Depth
With that in mind, let's take a look at Deere's main business drivers.
Illinois-based Deere is the world’s largest producer of agricultural equipment, manufacturing agricultural machinery since 1837 under the iconic John Deere brand with its signature green and yellow color scheme. It is the 70th-largest company in the S&P 500 Index with a market capitalization of around $109 billion. It has an advantage in most farm machinery categories as its machines come with advanced features and are better constructed than its competitors. Deere is currently the world leader in precision agriculture and remains focused on revolutionizing agriculture with technology, in an effort to make farming automated, easier and more precise across the production process.
Beginning fiscal 2021, the company has four reportable segments. Agriculture and turf operations, which generated around 63% of Deere’s revenues in fiscal 2020 has been divided into two new segments:
Production and Precision Agriculture segment is responsible for defining, developing, and delivering global equipment and technology solutions that cater to production-scale growers of large grains, small grains, cotton, and sugar. Primary products include large and certain mid-size tractors, combines, cotton pickers, sugarcane harvesters and loaders, and soil preparation, seeding, application and crop care equipment.
Small Agriculture and Turf segment will deliver products to support mid-size and small growers and producers globally, and turf customers. It will cater to production systems for dairy and livestock, high-value crops, and turf and utility operators. Products include certain mid-size and small tractors, and hay and forage equipment, riding and commercial lawn equipment, golf course equipment, and utility vehicles.
Construction and Forestry (25% of revenues in fiscal 2020) segment manufactures machines and service parts used in construction, earthmoving, material handling and timber harvesting. Deere also manufactures and distributes road building equipment through its wholly-owned subsidiaries of the Wirtgen Group.
Deere also finances sales and leases for new and used equipment through its
Financial Services segment, which generated 10% of the Deere’s revenues in fiscal 2021.
Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Deere ten years ago, you're likely feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in March 2011 would be worth $4,243.23, or a 324.32% gain, as of March 18, 2021. Investors should keep in mind that this return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 212.01% and gold's return of 18.17% over the same time frame.
Looking ahead, analysts are expecting more upside for DE.
Deere’s first-quarter fiscal 2021 earnings and revenues both improved year over year and beat the respective Zacks Consensus Estimate. Backed by improving conditions in the farm and construction sectors, the company expects net income for fiscal 2021 between $4.6 billion and $5 billion. The mid-point of the range suggests year-over-year improvement of 75%. Pick-up in commodity prices bodes well for agricultural equipment demand. Further, replacement demand triggered by the need to replace old equipment will continue to boost revenues. The Construction and Forestry segment will gain on strong demand from housing market. Deere’s focus on investing in new products with advanced technologies provides it a competitive edge. Additionally, efforts to expand in precision agriculture will drive growth in the long haul.
The stock is up 21.53% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 11 higher, for fiscal 2021. The consensus estimate has moved up as well.