Deere & Company - Growth & Income

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Deere & Company ( DE ) recently delivered record results for the first quarter of its fiscal 2012. This prompted analysts to revise their estimates significantly higher for both 2012 and 2013, sending the stock to a Zacks #2 Rank (Buy).

The company also recently announced a 12% increase in its quarterly dividend. It yields a solid 2.2%. Valuation is attractive too with shares sporting a PEG ratio of just 0.7.

Company Description

Deere & Company is one of the foremost agricultural equipment producers in the world. It is also a leading manufacturer of construction and forestry equipment.

The company is headquartered in Moline, Illinois and has a market cap of $33.5 billion.

First Quarter Results

Deere delivered record results for the first quarter of its fiscal 2012 on February 15. Earnings per share came in at $1.30, beating the Zacks Consensus Estimate of $1.24. It was an 8% increase over the same quarter in 2011.

Net sales rose 11% year-over-year to $6.767 billion, well ahead of the Zacks Consensus Estimate of $6.492 billion. This was driven in part by a 4% increase in prices as demand remained strong. Equipment sales were up 5% in the U.S. and Canada, and a whopping 21% overseas.

Sales in the Agriculture & Turf division climbed 8% year-over-year, while Construction & Forestry soared 22%.

Meanwhile, total operating profit rose 8%, driven by big gains in the Construction & Forestry segment.

Estimates Rising

Consensus estimates have moved significantly higher for both 2012 and 2013 following the strong first quarter:

DE: Deere & Company

This has sent the stock to a Zacks #2 Rank (Buy).

The Zacks Consensus Estimate for 2012 is now $7.99, representing 20% growth over 2011 EPS. The 2013 consensus estimate is currently $8.52, corresponding with 7% growth.

Dividend Rising Too

In addition to rising earnings estimates, the company's dividend has been moving higher too. It announced a 12% hike on February 29 - its 10th increase since 2004.

It yields a solid 2.2%.

Attractive Valuation

Valuation still looks attractive for DE with shares trading at just 10.2x 12-month forward earnings, well below its 10-year median of 14.4x.

And its PEG ratio is just 0.7 based on a consensus long-term EPS growth rate of 14%.

The Bottom Line

With rising estimates, solid growth projections, a 2.2% dividend yield and attractive valuation, Deere offers investors attractive upside potential.

Read the July 19 article here.

This Week's Growth & Income Zacks Rank Buy Stocks:

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Brookfield Infrastructure Partners L.P. ( BIP ) offers investors solid, stable growth and a juicy 5% dividend yield at a reasonable price. And earnings estimates have been rising after the company delivered better than expected results for the fourth quarter. It is a Zacks #2 Rank (Buy) stock. Read the full article.

Snap-on Incorporated ( SNA ) recently delivered solid fourth quarter results, prompting analysts to revise their estimates higher for both 2012 and 2013. This sent the stock to a Zacks #2 Rank (Buy). Analysts project solid double-digit earnings growth over the next few years, which, along with a 2.2% dividend yield and reasonable valuation, offer attractive upside potential. Read the full article.

Enbridge Inc. ( ENB ) has seen a nice increase in earnings estimates following its solid fourth quarter results. It is a Zacks #2 Rank (Buy). Management believes that the company can achieve average annual EPS growth of 10% through 2015. On top of this, the company pays a dividend that yields a solid 2.9%. Read the full article.

Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Co-Editor of the Reitmeister Value Investor .


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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