DE
Deere & Company
$651.82
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 16.7% above fair value
You pay
$651.82
Bear
$465.60
Fair
$558.72
Bull
$651.84
Bear
$465.60
-28.6%
$23.28 × 20x
Fair
$558.72
-14.3%
$23.28 × 24x
Bull
$651.84
+0.0%
$23.28 × 28x
Adjust Assumptions
24.0x
23.28$
Key Value Driver
Through-cycle normalized EPS ($23.28)
Implied Market Multiple
28.0x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (46 analysts)
$731.20
Divergence from AlphaVal
24%
Summary
Using 7-year normalized EPS of $23.28 at a 24x cycle multiple, the base-case value is $558.72 per share. P/TBV cross-check: 8.6x.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Price-to-book value of 8.6x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing