Value
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.6 |
| P/S | 7.9 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 4.6 |
| PEG | 5.1 |
| Analyst target | 4.0 |
- ▸Forward P/E: 27.2x
- ▸PEG: 1.46
DE · Why this verdict
Why Deere & (DE) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.3/10
ConfidenceHIGH
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Despite top-line pressure, the company has beaten earnings estimates in each of the past four quarters, including a 14% upside surprise most recently, demonstrating an ability to manage costs and margins even in a revenue headwind. Earnings | EPS beats continue in at least 3 of the next 4 reported quarters with a positive average surprise. | →Stable |
| CounterBeating a declining earnings estimate is a low bar; if the consensus continues to ratchet down ahead of each quarter, the beat streak reflects lowered expectations rather than genuine operational outperformance, and may coincide with ongoing fundamental deterioration. | ||
The stock is just below the consensus analyst price target, leaving roughly 0.8% headroom to that level, which means the current price already reflects the market's best-case view and provides no meaningful reward for new buyers relative to the downside risk. Bear case | Analyst consensus price target rises at least 10% above current price within 12 months, reopening a meaningful reward-to-risk gap. | →Stable |
| CounterAnalyst targets tend to lag price—if the operating environment improves materially, sell-side upgrades could quickly reset targets higher and the current near-target positioning would be seen as a floor rather than a ceiling. | ||
Revenue declined 11% in the most recent period, and free cash flow represented only 23% of net income—a significant gap that flags the quality of reported earnings and suggests the business is consuming more cash than the income statement implies. Quality breakdown | Revenue growth turns positive on a year-over-year basis and free cash flow rises to at least 50% of net income for 2 consecutive quarters. | →Stable |
| CounterHeavy equipment businesses routinely show FCF/NI below 100% during upcycles when working capital builds ahead of demand; if the cycle turns, cash conversion could normalize quickly, vindicating the earnings quality concern as timing rather than structural. | ||
With a debt-to-equity ratio of 3.8 and a dividend payout that equates to 113% of some earnings measures, the financial structure leaves limited cushion if cash generation softens further, and the dividend may be drawing on sources beyond current earnings. Catalyst breakdown | Free cash flow rises to cover the annual dividend by at least 1.2 times within the next 12 months, without additional debt issuance. | →Stable |
| CounterMachinery businesses with financing divisions routinely carry elevated leverage ratios that are standard for the industry structure; the headline D/E may overstate actual balance-sheet risk if a material portion of debt is matched by finance-division receivables. | ||
Despite top-line pressure, the company has beaten earnings estimates in each of the past four quarters, including a 14% upside surprise most recently, demonstrating an ability to manage costs and margins even in a revenue headwind.
→StableEarnings
- Expectation
- EPS beats continue in at least 3 of the next 4 reported quarters with a positive average surprise.
CounterBeating a declining earnings estimate is a low bar; if the consensus continues to ratchet down ahead of each quarter, the beat streak reflects lowered expectations rather than genuine operational outperformance, and may coincide with ongoing fundamental deterioration.
The stock is just below the consensus analyst price target, leaving roughly 0.8% headroom to that level, which means the current price already reflects the market's best-case view and provides no meaningful reward for new buyers relative to the downside risk.
→StableBear case
- Expectation
- Analyst consensus price target rises at least 10% above current price within 12 months, reopening a meaningful reward-to-risk gap.
CounterAnalyst targets tend to lag price—if the operating environment improves materially, sell-side upgrades could quickly reset targets higher and the current near-target positioning would be seen as a floor rather than a ceiling.
Revenue declined 11% in the most recent period, and free cash flow represented only 23% of net income—a significant gap that flags the quality of reported earnings and suggests the business is consuming more cash than the income statement implies.
→StableQuality breakdown
- Expectation
- Revenue growth turns positive on a year-over-year basis and free cash flow rises to at least 50% of net income for 2 consecutive quarters.
CounterHeavy equipment businesses routinely show FCF/NI below 100% during upcycles when working capital builds ahead of demand; if the cycle turns, cash conversion could normalize quickly, vindicating the earnings quality concern as timing rather than structural.
With a debt-to-equity ratio of 3.8 and a dividend payout that equates to 113% of some earnings measures, the financial structure leaves limited cushion if cash generation softens further, and the dividend may be drawing on sources beyond current earnings.
→StableCatalyst breakdown
- Expectation
- Free cash flow rises to cover the annual dividend by at least 1.2 times within the next 12 months, without additional debt issuance.
CounterMachinery businesses with financing divisions routinely carry elevated leverage ratios that are standard for the industry structure; the headline D/E may overstate actual balance-sheet risk if a material portion of debt is matched by finance-division receivables.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Deere has sustained a four-quarter earnings beat streak and trades with positive price momentum, but revenue has declined 11% and free cash flow represents only 23% of reported net income—raising serious questions about earnings quality—while the stock sits within less than 1% of its analyst price target, leaving essentially no upside cushion from current levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 6.1 |
| ROA | 2.6 |
| Gross margin | 1.2 |
| Op margin | 7.0 |
| Net margin | 5.1 |
| Current ratio | 7.6 |
| FCF quality | 1.8 |
| Moat | 3.6 |
| Piotroski F | 4.4 |
- ▸Earnings quality RED FLAG: 23% FCF/NI
- ▸No competitive moat
Growth
0.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.0 |
| EPS growth | 0.3 |
- ▸Declining revenue: -11%
Momentum
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 5.9 |
| MA position | 9.0 |
| Volume | 2.9 |
- ▸Overbought (RSI 70)
- ▸Above 200-day MA
Sentiment
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 4.0 |
| Analyst rating | 7.5 |
| Price target | 5.6 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.7 |
| quality rank | 7.9 |
| growth rank | 1.2 |
- ▸Best-in-class margins
Technical
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.1 |
| support resistance | 2.1 |
| 52w position | 8.5 |
| gap | 5.0 |
Risk (lower is worse)
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.8 |
| days to cover | 6.6 |
| volatility | 5.2 |
| put call | 7.4 |
| implied vol | 5.9 |
| beta | 7.6 |
| debt equity | 1.2 |
| news risk | 6.0 |
- ▸Concentration risks: 2 MED (10-K Item 1A)
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 6.9 |
| dividend safety | 5.2 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 104.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:6.5>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:45d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.6=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.60
Upside
-6.3%
Downside
10.6%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 2.8 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Catalyst at 6.7) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.6=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.60 — supplementary context, not the trigger for this path.
The strongest dimensions are Catalyst at 6.7, Momentum at 6.5, and Risk (lower is worse) at 6.1; the weakest are Growth at 0.1, Peer rank at 4.0, and Value at 4.3. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.60 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Negligible Upside At Target
Trip ifAnalyst consensus price target rises more than 10% above the current price, restoring meaningful upside headroom.
- P2Revenue Decline Weak Cash Conversion
Trip ifRevenue growth rises above 5% year-over-year for 2 consecutive quarters, signaling a reversal of the recent 11% decline.
- P3Consistent Earnings Beat Streak
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P4Leverage And Payout Strain
Trip ifFree cash flow rises above 80% of net income for 2 consecutive quarters.