John Deere (DE) Comparative Analysis James Tompkins

Balance Sheet Items

  • Cash is pretty even with industry average and increasing from 6.17% to 7.54%
  • Largest contributor to total assets was financing receivables at 40.88% for 2016
  • John Deere has a very small percentage of Property Plant and Equipment compared to its competitors at only around 9% instead of 20% to 24% for Cummins and Caterpillar respectively.
  • John Deere also shows total Liabilities at 88% which is slightly about Caterpillar at 82%
  • Largest single liability was long term debt at around 40%

Income Statement Items

  • Net Sales have dropped almost $10 billion since 2013 for John Deere
  • Finance and Interest income have shown a solid increase from 6.92% to 10.74%
  • Cost of sales was at around 78% which was slightly higher than the competitors which were around 73%
  • Net Income for John Deere was almost even with Cummins at around 7.5% but Caterpillar only showed 4.6%

Ratios

  • John Deere showed a current ratio of 1.98 with a quick ratio of 1.80 so the company is very liquid without a lot of inventory while Cummins showed 2.09 and 1.22 and Caterpillar showed 1.79 and 1.31
  • John Deere has a Debt to Equity of 7.88 while Cummins is at .95 and Caterpillar is at 4.27
  • For average collection period John Deere shows only 47 days in comparison to 105 for Cummins and 121 for Caterpillar
  • John Deere showed an ROA of 2.62% with Cummins and Caterpillar showing 9.24% and 2.68%
  • John Deere also showed a ROCE of 45.71%

Strengths

  • Brand Name
  • Loyal customer base
  • Still showing profit in a downward part of a cycle
  • Still being on par with competitors in downward part of a cycle

Weaknesses

  • Highly leveraged
  • Net sales drop of $10 billion in 3 years
  • Cost of Good Sold being such a significant portion of Net Sales

Credits:

Created with images by Mostly Dans - "John Deere 9400T" • Mostly Dans - "Harvester approaches" • Michel Curi - "John Deere 7210 R" • Rob Dammers - "John Deere 650M" • Johan.V. - "John Deere 710D"

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