Morningstar Rating

Stock Research and Analysis

by Kwame Webb, CFA

Bulls Say

Globally, calorie consumption is growing, and we think this trend will spur a need for greater agricultural productivity and more purchases of Deere equipment.
As emerging nations such as China and India experience declining agricultural workforces, it puts an upward bias on agricultural mechanization and demand for Deere’s products.
The European and U.S. governments have created significant crop insurance and subsidy programs to keep a price floor under biofuel crops and bolster farming incomes. Read more 

Bears Say

The global ethanol boom that lifted farm income and demand for biofuel crops is decelerating as global concerns about food prices for starving populations have begun to overwhelm the desire for renewable fuel sources.
The EPA has noted a potential relaxation of the renewable fuel standard, which would limit the upside potential for corn-based ethanol as a fuel source.
Deere’s construction business sells largely into the small construction equipment category which tends to be more price competitive and offer less opportunity for higher margins by selling equipment with the Deere name. Read more 

Management

We give Deere an Exemplary stewardship rating. Deere is led by CEO Sam Allen, a 37-year Deere veteran who was promoted to the role in 2009. Allen’s predecessor heavily emphasized metrics like total shareholder value added and operating return on assets.  Read more 

Profile

Moline, Illinois-based Deere manufactures agricultural, construction, turf, and forestry machinery. To support dealer inventory and customer purchases, it provides secured   Read more 

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