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Deere Closes Out 2021 on Positive Note Despite Challenges in Fourth Quarter

Dawit Woldemariam Equity Analyst

Analyst Note

| Dawit Woldemariam |

Deere’s fourth-quarter results showed resilience despite continuing supply chain constraints and a labor strike. This led us to increase our near-term revenue and margins assumptions for the company, pushing our fair value estimate to $260 per share from $256. While we expect supply chain challenges to persist throughout 2022, we remain confident in Deere’s ability to offset cost increases, thanks to its pricing power. In the quarter, the company benefited from favorable price realization across its segments, which was up by midsingle digits on average. Management expects high-single-digit price realization in 2022, given strong demand for its equipment.

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Company Profile

Business Description

Deere is the world’s leading manufacturer of agricultural equipment, producing some of the most recognizable machines in the heavy machinery industry. The company is divided into four reportable segments: production and precision agriculture, small agriculture and turf, construction and forestry, and John Deere Capital. Its products are available through a robust dealer network, which includes over 1,900 dealer locations in North America and approximately 3,700 locations globally. John Deere Capital provides retail financing for machinery to its customers, in addition to wholesale financing for dealers, which increases the likelihood of Deere product sales.

Contact
One John Deere Place
Moline, IL, 61265
T +1 309 765-8000
Sector Industrials
Industry Farm & Heavy Construction Machinery
Most Recent Earnings Oct 31, 2021
Fiscal Year End Oct 31, 2022
Stock Type Cyclical
Employees 75,600

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