Morningstar Rating

Stock Research and Analysis

by Adam Fleck, CFA

Bulls Say

As farm sizes in India and China consolidate, we expect farmers in these countries will demand higher powered and more advanced forms of agricultural equipment.
Corn-based ethanol continues to be used as an alternative form of fuel in the U.S., creating a floor for corn demand that bolsters farmers' incomes.
Deere's finance arm has typically required a substantial down payment on new equipment sales, and John Deere machinery generally holds its secondhand value well. We don't expect Deere Credit to face meaningful write-offs, even as the agricultural equipment market has weakened. Read more 

Bears Say

Weakening economic conditions in Europe or North America could lead to a difficult sales environment for Deere, even if farm income remains robust.
Historically, residential construction has driven demand for about one third of Deere's construction segment. Although this end market has begun to recover in recent quarters, a renewed downturn would substantially affect the segment's results.
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. Read more 

Management

CEO Samuel Allen--a 37-year Deere veteran--was promoted to the top position in 2009 from his position as president of the construction equipment segment. Allen has continued many of the initiatives installed by former CEO Robert Lane during the latter's   Read more 

Profile

Based in Moline, Ill., Deere designs and manufactures agricultural, landscaping, construction, and forestry equipment. The firm typically finances a large portion of its   Read more 

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