Stock Analysis & Valuation Deere & Company (DCO.DE)

• Previous Close: €440.40
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	306.50	-30
Intrinsic value (DCF)	188.40	-57
Graham-Dodd Method	95.60	-78
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Deere & Company (NYSE: DE), traded as DCO.DE on Deutsche Börse, is a global leader in agricultural, construction, and forestry machinery, with a strong presence in financial services. Founded in 1837 and headquartered in Moline, Illinois, Deere operates through four key segments: Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services. The company is renowned for its advanced precision agriculture technology, including autonomous tractors and AI-driven crop management solutions, positioning it at the forefront of smart farming innovation. Deere’s Construction and Forestry segment serves infrastructure and logging industries with durable, high-performance equipment. With a market capitalization exceeding €122 billion, Deere is a cornerstone of the Industrials sector, benefiting from long-term trends in agricultural mechanization, infrastructure development, and sustainable land management. Its integrated financial services arm further strengthens customer loyalty by offering tailored financing solutions.

Investment Summary

Deere & Company presents a compelling investment case due to its dominant market position in agricultural machinery, technological leadership in precision farming, and resilient financial performance. With €50.5 billion in revenue and €7.1 billion net income (FY 2024), the company demonstrates strong profitability (EPS €25.76) and robust cash flow generation (€9.2 billion operating cash flow). However, its high leverage (€65.5 billion total debt) and cyclical exposure to commodity prices and construction demand pose risks. The dividend (€5.73/share) is sustainable, supported by consistent cash flows. Investors should weigh Deere’s innovation edge against macroeconomic sensitivity.

Competitive Analysis

Deere’s competitive advantage stems from its unmatched scale in agricultural machinery, brand loyalty, and R&D investments in precision agriculture (e.g., autonomous tractors). Its integrated financial services differentiate it from pure-play manufacturers by easing customer financing. In Construction & Forestry, Deere competes with Caterpillar but focuses on mid-range equipment. However, Deere faces pricing pressure from low-cost Asian rivals like Kubota and CNH Industrial, which aggressively target emerging markets. While Deere’s technology commands premium pricing, its reliance on North America (60% of revenue) exposes it to regional downturns. The company’s direct-to-farm digital tools (e.g., John Deere Operations Center) create sticky customer relationships, but competitors are closing the tech gap. Deere’s dual focus on agriculture and construction diversifies revenue but dilutes specialization compared to pure agriculture players like AGCO.

Major Competitors

• Caterpillar Inc. (CAT): Caterpillar dominates global construction and mining equipment, outperforming Deere in heavy machinery but lacking Deere’s agricultural focus. Its stronger international presence (55% revenue outside North America) mitigates regional risks. However, CAT’s cyclicality is higher due to mining exposure. Deere’s precision ag tech gives it an edge in farm equipment.
• Kubota Corporation (KUBTY): Kubota is a key rival in compact tractors and rice farming equipment, with strong Asia-Pacific distribution. It undercuts Deere on price but lags in high-tech solutions. Kubota’s focus on small-scale agriculture complements Deere’s large-farm orientation, making it a threat in emerging markets.
• CNH Industrial N.V. (CNHI): CNH (parent of Case IH and New Holland) competes directly with Deere in global agriculture. Its broader brand portfolio appeals to diverse farm sizes, but R&D spending trails Deere’s. CNH’s weaker financial services division reduces customer lock-in compared to Deere’s integrated model.
• AGCO Corporation (AGCO): AGCO (Massey Ferguson, Fendt) focuses solely on agriculture, offering specialized equipment for niche markets. It lacks Deere’s construction diversification but competes effectively in Europe. AGCO’s smaller scale limits its tech budget, though its partnership with Trimble narrows Deere’s precision farming lead.