November 03, 2015 - 9:46am EST by
2015 2016
Price: 80.19 EPS 5.47 2.93
Shares Out. (in M): 338 P/E 14.7 25.7
Market Cap (in $M): 27,043 P/FCF 12.2 12.8
Net Debt (in $M): 2,583 EBIT 2,884 1,732
TEV ($): 29,626 TEV/EBIT 10.3 16.6
Borrow Cost: General Collateral

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  • Agriculture
  • Berkshire-owned
  • Cyclical


I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.


Deere will report FY2015 earnings on November 25. The Company has historically initiated forward year guidance with Q4 earnings. We expect Deere to initiate guidance for 2016 that is far weaker than consensus estimates (perhaps a 25% decline in A&T vs. expectations for an 8% decline). The weak guidance should result in a wave of lower earnings revisions. As cash flow decreases, we also expect Deere to curtail its share buyback program. Longer-term we expect industry sales data to remain very weak, inventory levels to remain high and second hand prices to continue to fall. We believe that all of these data-points will force the market to recognize that Deere is in the early stages of a multi-year downturn and that there is no rebound in sight. We expect all of these factors to help catalyze the stock to fair value.

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