Top-line growth, global demand make Deere worth watching
What’s great about the agriculture sector is that when it does well, it’s not just farmers who make money. Businesses from fertilizers to farm equipment also stand to gain. Deere (NYSE: DE) is one such beneficiary.
Its second-quarter revenues surged 24 percent, leading the company to raise its full-year earnings expectations. Higher shipment volumes and improved pricing have been boosting revenue by a compounded average rate of 6.8 percent over the past half-decade – and a whopping 26.8 percent over the past year. This strong top-line growth has helped Deere’s bottom line grow by 118.4 percent over the past year.
Deere has been quite aggressive with new products and global expansion, strengthening its foothold in markets such as China and India. The main concern on Deere’s balance sheet is its debt load, but strong profit margins and ample cash provide some relief.
Deere’s P/E ratio is in line with its peers, but given its strong performance and solid capital investments, it seems that its true potential has not been factored in much.
Deere raised its dividend last quarter, the ninth quarterly dividend increase in seven years. Its dividend yield is a moderate 2.1 percent.
Deere seems well-poised to benefit as the global economy eventually gets back on its feet. You might want to keep an eye on it.
My dumbest investment
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I am now working at making my $1,774 monthly house payment with a $47,000 account. – M., online
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