After Enormous Run-Up, Why Deere Stock Could Still be a Bargain

It would seem that this year’s drought, the worst in decades, might not dent Deere (DE). As the Wall Street Journal reported, analysts covering the industry consider the drought a “blip,” and Deere’s chief economist said last month that the farm sector is strong -- and presumably buying tractors.

Even if the drought does dampen sales, it will be temporary. And if Deere’s list of risk factors is to be believed, only really big macro things can hurt it, including a change to government farm programs, a collapse of the Euro, or new laws to combat global warming. Some of the risks it lists, including a tough time for the financial services industry, have already shown themselves and have failed to hurt Deere much this far.

DE Chart

DE data by YCharts

In the meantime, its price to earnings ratio has fallen near its 2009 low.

DE PE Ratio Chart

DE PE Ratio data by YCharts

And earnings have climbed.

DE Earnings Per Share Chart

DE Earnings Per Share data by YCharts

To be sure, you can get rival Agco's (AGCO) earnings for less.

DE PE Ratio Chart

DE PE Ratio data by YCharts

But only Deere’s been taking care of investors by regularly raising its dividend.

DE Dividend Chart

DE Dividend data by YCharts

It may be time to buy stock in tractors.

From the editors of YCharts.YCharts Pro Investor Service includes professional stock charts, stock ratings and portfolio strategies.



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