John Deere (DE) Evaluation James Tompkins

Income Statement

  • John Deere has shown a significant drop in sales of almost $10 billion since 2014
  • Finance and Interest income continues to increase and will continue to as sales grow
  • Cost of sales has decreased by $6.5 billion but is still 78% of net sales
  • Net income has decreased by $1.5 billion since 2014 but has still remained at around 6.5% of sales

Balance Sheet

  • Cash and cash equivalents are showing increases and are up $1.6 billion from 2014
  • Financing receivables have gone down but still remain at around 40% of net sales and are projected to rise with net sales
  • Inventory kept by John Deere is decreasing and should continue to as the company sends more inventory to franchisors
  • Property and Equipment has dropped $500 million since 2014 but will go up after acquisitions made by the company of around $200 million
  • Short-term borrowings have decreased by $1 billion as the company tries to become less leveraged
  • Long-term borrowings have shown a decrease of over $1 billion since 2014 and will continue to drop over the next 5 years

Cash Flows

  • Cash from operating activities has remained steady at around $3.6 billion but are projected to rise to around $4.2 billion by 2019
  • John Deere has shown a drop of almost $1.5 billion in cash used for investing since 2014 but is expected to get back to around $2.8 billion
  • Cash used for financing has shown dramatic increases of over $2 billion which should continue as the company works on paying off debt

Ratios

  • Looking at Liquidity John Deere has steadily shown a current ratio of around 2 with a quick ratio of around 1.8 and should continue this trend through 2019
  • When looking at leverage, the company shows a debt to equity of 7.8 which should decrease as the company works on paying off debt into 2024
  • The company is showing strong activity for a downward cycle with an inventory turnover of 6.5 which is on par with the competition
  • When looking at profitability the company is showing a GPM of 22% and Operating Profit Margin of 9.5%

Future Outlook

  • Sales should steady out for 2017 and should show increases through 2018 and 2019
  • John Deere should continue to remain liquid with current ratio numbers around 2
  • John Deere will become less leveraged as a large part of their long-term debt will come due by 2024
  • Deere should show increased Net income due to cost of sales decreases and sales increases.

Credits:

Created with images by Ted Van Pelt - ""John Deere"" • Misserion - "Runs like a Deere" • Mostly Dans - "John Deere 9400T" • brandyabbott - "john deere tractor green" • Aiko, Thomas & Juliette+Isaac - "antique John Deere" • wisconsinpics - "john deere combine"

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