Alexis Wolff
1st Hour
Stock Project
1. Ticker Symbol: DE
Industry: Farm & Construction Machinery
Name: Deere & Company Common Stock
2. Company Profile: Deere & Company manufactures and distributes agricultural equipment,
construction and forestry equipment worldwide. The company markets its products and services
primarily through independent retail dealer networks and retail outlets.
3. Analyst Opinion/ Insider Transactions:
Before analyzing a company for investment, it's important to have a perspective on how
well the business has performed. Because at the end of the day, if you are an investor, you
are buying the business. The FAST Graphs™ presented with this article will focus first on the
business behind the stock. The orange line on the graph plots earnings per share since
2005. A quick glance vividly reveals the historical operating record of the company.
Deere & Co (DE) is a world leader in providing advanced products and services and is
committed to the success of customers whose work is linked to the land - those who
cultivate, harvest, transform, enrich and build upon the land to meet the world's
dramatically increasing need for food, fuel, shelter and infrastructure.
This article will reveal the business prospects of Deere & Co through the lens of FAST
Graphs - fundamentals analyzer software tool. Therefore, it is offered as the first step
before a more comprehensive research effort. Our objective is to provide companies that
have excellent historical records and appear reasonably priced based on past, present and
future data and expectations.
A quick glance at the graph itself and the orange earnings justified valuation line will tell the
readers volumes about how well the company has historically been managed and performed
as an operating business. Simply put, the reader should ask whether this example is worthy
of a greater investment of their time and effort based on the data as presented and
organized. The FAST Graphs' unique advantage is the graphical articulation of the price
value proposition.
Earnings Determine Market Price: The following earnings and price correlated F.A.S.T.
Graphs™ clearly illustrates the importance of earnings. The Earnings Growth Rate Line or
True Worth™ Line (orange line with white triangles) is correlated with the historical stock
price line. On graph after graph the lines will move in tandem. If the stock price strays away
from the earnings line (over or under), inevitably it will come back to earnings.
Earnings & Price Correlated Fundamentals-at-a-Glance
A quick glance at the historical earnings and price correlated FAST Graphs™ on Deere & Co
shows a picture of undervaluation based upon the historical earnings growth rate of 13.2%
and a current P/E of 11.1. Analysts are forecasting the earnings growth to continue at about
10%, and when you look at the forecasting graph below, the stock appears undervalued
(it's outside of the value corridor of the five orange lines - based on future growth).
Deere & Co: Historical Earnings, Price, Dividends and Normal P/E Since 2005
(Click to enlarge)
Performance Table Deere & Co
The associated performance results with the earnings and price correlated graph, validates
the principles regarding the two components of total return: capital appreciation and
dividend income. Dividends are included in the total return calculation and are assumed
paid, but not reinvested.
When presented separately like this, the additional rate of return a dividend paying stock
produces for shareholders becomes undeniably evident. In addition to the 11.3% Annualized
ROR (w/o Div) (green circle), long-term shareholders of Deere & Co, assuming an initial
investment of $10,000, would have received an additional $2,565.91 in total dividends paid
(blue highlighting) that increased their Annualized ROR (w/o Div) from 11.3% to a Total
Annualized ROR plus Dividends Paid of 12.6% versus 4.7% in the S&P 500.
(Click to enlarge)
The following graph plots the historical P/E ratio (the dark blue line) in conjunction with 10year Treasury note interest. Notice that the current price earnings ratio on this quality
company is as normal as it has been since 2005.
(Click to enlarge)
A further indication of valuation can be seen by examining a company's current P/S ratio
relative to its historical P/S ratio. The current P/S ratio for Deere & Co is .96 which is
historically normal.
(Click to enlarge)
Looking to the Future
Extensive research has provided a preponderance of conclusive evidence that future longterm returns are a function of two critical determinants:
1. The rate of change (growth rate) of the company's earnings
2. The price or valuation you pay to buy those earnings
Forecasting future earnings growth, bought at sound valuations, is the key to safe, sound
and profitable performance.
The Estimated Earnings and Return Calculator Tool is a simple yet powerful resource that
empowers the user to calculate and run various investing scenarios that generate precise
rate of return potentialities. Thinking the investment through to its logical conclusion is an
important component towards making sound and prudent commonsense investing
decisions.
The consensus of 22 leading analysts reporting to Capital IQ forecast Deere & Co's longterm earnings growth at 10%. Deere & Co has high long-term debt at 75% of capital. Deere
& Co is currently trading at a P/E of 11.1, which is below the value corridor (defined by the
five orange lines) of a maximum P/E of 18. If the earnings materialize as forecast, based
upon forecasted earnings growth of 10%, Deere & Co's share price would 197.12 at the end
of 2018 (brown circle on EYE Chart), which would represent a 16.8% annual rate of total
return which includes dividends paid (yellow highlighting).
(Click to enlarge)
Earnings Yield Estimates
Discounted Future Cash Flows: All companies derive their value from the future cash flows
(earnings) they are capable of generating for their stakeholders over time. Therefore,
because Earnings Determine Market Price in the long run, we expect the future earnings of
a company to justify the price we pay.
Since all investments potentially compete with all other investments, it is useful to compare
investing in any prospective company to that of a comparable investment in low risk
Treasury bonds. Comparing an investment in Deere & Co to an equal investment in 10-year
Treasury bonds illustrates that Deere & Co's expected earnings would be 8.8 (purple circle)
times that of the 10-year T-bond interest (see EYE chart below). This is the essence of the
importance of proper valuation as a critical investing component.
4. Competitor1: United Technologies Corp.
P/E Ratio: 14.06
Competitor2: Caterpillar Inc.
P/E Ratio: 12.10
5. Key Statistics:
Price: $91.73
Shares Outstanding: 389.56M
Trailing P/E: 11.47
Price/book: 4.77
Forward annual dividend rate: 2.04
Average Volume (3 month): 2,984,000
1.
Ticker Symbol: CAT
Industry: Farm& Construction Machinery
Name: Caterpillar Inc.
Company Profile: Caterpillar Inc. manufactures and sells construction and mining equipment,
diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide
2. Analyst Opinion/ Insider Transactions:
3. Competitor1: Zoomlion Heavy Industry Science and Technology Co., Ltd.
P/E Ratio: 7.01
Competitor2: Caterpillar Inc. (CATR.PA)
P/E Ratio: 9.13
4. Key Statistics:
Price: $89.79
Shares Outstanding: 656.20M
Trailing P/E: 12.10
Price/book: 3.22
Forward annual dividend rate: 2.08
Average Volume (3month): 6,827,640
1. Ticker Symbol: HAS
Industry: Toys&Games
Name: Hasbro, Inc.
2. Company Profile: Hasbro, Inc., together with its subsidiaries, provides children’ s and family
leisure time products and services worldwide. Its product offerings encompass various toys,
including boys’ action figures, vehicles and play sets, girls’ toys, electronic toys, plush products,
preschool toys and infant products, electronic interactive products, and creative play and toyrelated specialty products; and games comprising action, board, card, electronic, trading card,
and role-playing games.
3. Analyst Opinion/ Insider Transactions:
4. Competitor1: JAKK
P/E Ratio: 18.82
Competitor2: MAT
P/E Ratio: 19.95
5. Key Statistics:
Price: $47.46
Shares Outstanding: 129.34M
Trailing P/E: 18.82
Price/book: 4.20
Forward annual dividend rate: 1.60
Average Volume (3month): 1,462,210
1. Ticker Symbol: MAT
Industry: Toys & Games
Name: Mattel, Inc.
2. Company Profile: Mattel, Inc., together with its subsidiaries, designs, manufactures, and
markets various toy products. The company operates in three segments: North America,
International, and American Girl. Its products comprise fashion dolls and accessories, vehicles
and play sets, and games and puzzles
3. Analyst Opinion/ Insider Transactions:
4. Competitor1: HAS
P/E Ratio: 18.82
Competitor2:JAKK
P/E Ratio: N/A
5. Key Statistics:
Price: $45.89
Shares Outstanding: 345.40M
Trailing P/E: 19.95
Price/book: 5.20
Forward annual dividend rate: 1.44
Average Volume (3month): 2,440,250
1. Ticker Symbol: DVR
Industry: Oil & Gas Pipelines
Name: Cal Drive International, Inc.
2. Company Profile: Cal Dive provides a number of key services to the oil and gas industry, which
include offshore construction, inspection, maintenance, repair and decommissioning of pipeline
infrastructure.
3. Analyst Opinion/ Insider Transactions:
4. Competitor1: TKPPY
P/E Ratio: 45.10
Competitor2:OLL
P/E Ratio: 25.69
5. Key Statistics:
Price: $1.78
Shares Outstanding: 93.73M
Trailing P/E: N/A
Price/book: 0.67
Forward annual dividend rate: N/A
Average Volume(3 month): 1,420,510
1. Ticker Symbol: STX
Industry: Technology
Name: Seagate Technology Public Limited Company
2. Company Profile: Seagate Technology Public Limited Company designs, manufactures, markets,
and sells hard disk drives for enterprise storage, client compute, and client non-compute market
applications worldwide.
3. Analyst Opinion/ Insider Transactions:
4. Competitor1: SNDK
P/E Ratio: 28.77
Competitor2: WDC
P/E Ratio: 7.44
5. Key Statistics:
Price: 42.32
Shares Outstanding: 358.55M
Trailing P/E: 6.71
Price/book: 4.60
Forward annual dividend rate: 1.52
Average Volume(3month): 5,386,630
1. Ticker Symbol: LVS
Industry: Entertainment
Name: Las Vegas Sands Corp.
2. Company Profile: Las Vegas Sands Corp. develops, owns, and operates integrated resorts in Asia
and the United States.
3. Analyst Opinion/ Insider Transactions:
4. Competitor1: CZR
P/E Ratio: N/A
Competitor2: WYNN
P/E Ratio: 24.84
5. Key Statistics:
Price: $57.01
Shares Outstanding: 823.18M
Trailing P/E: 29.51
Price/book: 6.65
Forward annual dividend rate: 1.40
Average Volume (3month): 6,019,440
1. Ticker Symbol: DWA
Industry: Entertainment
Name: DreamWorks Animation Inc.
2. Company Profile: DreamWorks Animation SKG, Inc. engages in the development, production,
and exploitation of animated films and associated characters worldwide
3. Analyst Opinion/ Insider Transactions:
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