Is Deere and Company a Good Investment?

PHOTO CREDIT: Deere and Company

OVERVIEW

Deere and Company is an industrial company based in the United States that manufactures tractors of all sizes and any attachments and products related to tractors like seeding machines, cotton pickers, sugarcane harvesters, balers, mowers, and many others. They also manufacture machines used in construction, timber harvesting, and other infrastructure needs. They operate financial solutions for their products as well.

Why You Should?

  1. Deere and Company has seen a spike in demand for their products and services because of an increase in demand for agricultural products. The company manufactures key equipment like tractors and attachments needed to operate a farm and be a good agribusiness. This growth will benefit the company in the long-term.
  2. Deere and Company offer some of the most essential products to farms around the world. The company looks to further increase its presence in countries like Australia and New Zealand, whose farmers need efficient methods to be competitive on the world stage. They also look to take advantage of Brazil’s sugarcane harvest to sell some of their products as well. This expansion will benefit the company’s results.
  3. Deere and Company will benefit by a stronger global economy which will cause the demand for agricultural products to rise. Deere and Company can take advantage of this trend to sell more of their products to farms around the world. Deere and Company usually benefits during times of economic strength as farmers and countries have more money to spend on machinery.
  4. Deere and Company manufacture machines for every farmer and countries needs. From tractors for lawn mowing, seeding and harvesting to large excavators and other heavy machinery for road and other infrastructure construction, Deere and Company has products which people can use for different needs. This will benefit the company’s future growth.
  5. Deere and Company has seen rising revenues and profits over the past couple of financial years due to the reasons mentioned above. This will help the company build a stronger balance sheet which will help them go through tough economic times. Having more cash on hand will help them develop new products for the future of farming and infrastructure development. In the financial year of 2019, the company reported revenues of around 39.2 billion and profits of around 3.25 billon. Both of these metrics are higher than what the company reported in the financial year of 2018 when they had revenues of around 37.3 billion and profits of around 2.4 billion.
PHOTO CREDIT: Yahoo Finance

Why You Should Not?

  1. Deere and Company face tough competition from several companies like Caterpillar, CNH Industrial, and Kubota Corporation, all of which offer products that directly compete to the ones that John Deere offer. This might negatively impact the company’s future growth.
  2. Deere and Company has been negatively impacted by trade tensions caused by the current administration. This has caused operating costs to increase as Deere and Company need to spend more money on resources like steel to build their machinery. Farmers have also been hit hard and do not have the means to upgrade their equipment. This has hurt the company’s sales.

MY OPINION

In my opinion, I think that Deere and Company is a great long-term investment due to an increased demand for agricultural goods, strong expansion plans, a strong economy, and a wide variety of products for many different uses. However, competition and trade tensions might negatively impact the company’s future results and sales numbers.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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