However, the increase in DE stock has been far from consistent. Returns for the stock were 29% in 2021, 27% in 2022, and -5% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 — indicating that DE underperformed the S&P in 2023.
The company's net income fell 42% to about $1.7 billion, compared to $3.0 billion in the prior-year quarter. On a per-share basis, earnings came in at $6.29 in Q3'24, compared to $10.20 in the prior-year quarter. Overall, the company's sales and earnings were above the street estimates. Deere maintained its outlook for fiscal 2024, with net income forecast to be around $7 billion.
Deere & Company, also commonly known as John Deere, is an agriculture and construction equipment manufacturer based out of Moline, Illinois. It also manufactures turf and forestry equipment and service parts for its products.
Apart from its equipment manufacturing operations, Deere also has a financial services division that offers financing solutions for sales and leases of its products.
Deere has an established global presence through its manufacturing plants, joint ventures, and dealers.
Below are key drivers of Deere's value that present opportunities for upside or downside to the current Trefis price estimate for Deere:
Deere's Agriculture and Turf equipment division is the highest revenue-generating segment for the company. In the fiscal year 2023, the Agriculture and Turf Equipment segment contributed $41 billion of the $61 billion revenue generated by Deere. The segment's high margins, combined with the large market share that Deere commands in the Agricultural equipment industry, will ensure long-time profitability for the company. Additionally, driven by the food requirements of the growing population, the segment is positioned to grow for a long period of time. That said, there are near-term headwinds, with falling demand amid a decline in farm income and higher interest rates.
Deere has a strong presence in developing markets such as India, China, and Latin America. It has manufacturing plants, distribution centers, warehouses, and sales offices to cater to demand in these developing markets. In order to achieve further penetration, it also offers financial services. Economic growth and increased spending on agriculture and construction in developing markets offer long-term opportunities for Deere.
The global population is expected to keep on growing, thereby driving demand for food for sustenance and encouraging a rise in agricultural output.
Income levels in developing markets are rising; per capita income for developed markets, such as the U.S., stands at over $75,000 currently, rising 18% from levels seen in 2018, while for China, it's over $21,000, rising a significant 35% over the same period.
Large numbers of people are moving to urban areas in search of better jobs and living standards. This phenomenon is even more pronounced in developing markets. This has led to increased spending on infrastructure to support the rising population in urban areas, thereby driving growth in construction equipment sales.
