Wednesday, March 15, 2017

Deere & Company Equity Research

You have to hand it to Deere & Company's management. Not much has gone right from an end-market perspective in the last few years, with US farm cash receipts declining since 2014 as prices of key agricultural crops (ex. corn, wheat, and soybean) continue to fall. The end result is that farmers are declining to buy new equipment -- particularly the kind of high-margin large agricultural machinery that Deere thrives on -- and the company's sales have slumped.
However, Deere's stock is up nearly 40% on the year as management continues to defy the doubters. Let's analyze the key takeaways from the recent earnings report in order to see what's been going on and why the company looks set for better days.

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