Deere & CompanyDENYSE

Overview Intelligence Charts News Fundamentals

DCF Valuation

DCF Valuation Summary

Sell

Fair Value: $508.94 per share(market-calibrated)

-17.8%

Upside to Fair Value

Current

$619.22

Pure Model

$491.11

Fair Value

$508.94

Bull Case

$622.66

Bear Case

$378.10

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

3.68%

Calibrated Growth

2.61%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $491.11.

What's Driving This Ratingfor DE

↓

CapEx normalizing toward maintenance

Historical CapEx is 8.90% of revenue (heavy investment phase). Model fades this to 3.50% by Year 10, freeing up ~$3.3B in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 22.30% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects -8.14% revenue growth, fading to 2.25% by Year 10. Revenue reaches $61.4B (vs $44.7B today).

🎯

Market pricing in higher long-term growth

To justify $619.22, the market implies 3.68% perpetual growth — 143bps above the model's 2.25%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 67.86% indicates efficient cash generation. FCF reaches $11.2B by Year 10 (18.26% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.96

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)8.82%

Cost of Debt

Pre-tax Cost of Debt3.45%

Tax Rate20.12%

After-tax Cost of Debt2.76%

Equity Weight (E/V)72.40%

Debt Weight (D/V)27.60%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (72.40% × 8.82%) + (27.60% × 2.76%)

= 7.15%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$41.0B	$50.2B	$54.9B	$57.4B	$61.4B
EBIT	$9.1B	$11.2B	$12.2B	$12.8B	$13.7B
Tax	$1.8B	$2.3B	$2.5B	$2.6B	$2.8B
NOPAT	$7.3B	$8.9B	$9.8B	$10.2B	$10.9B
+ Depreciation	$1.9B	$2.3B	$2.5B	$2.6B	$2.8B
- Capex	$3.6B	$3.9B	$3.6B	$3.0B	$2.1B
- Δ NWC	-$1.1B	$1.6B	$362M	$379M	$405M
Free Cash Flow	$6.6B	$5.8B	$8.4B	$9.4B	$11.2B
Discount Factor	0.933	0.813	0.708	0.617	0.501
Present Value	$6.2B	$4.7B	$5.9B	$5.8B	$5.6B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$11.2B

Terminal Growth Rate2.25%

WACC7.15%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$233.8B

PV of Terminal Value$117.2B

Exit Multiple Method

Year 10 EBITDA$16.5B

Exit Multiple (EV/EBITDA)18.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$297.2B

PV of Terminal Value$149.0B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$55.6B

PV of Terminal Value$117.2B

Enterprise Value$172.8B

(-) Net Debt$55.7B

Equity Value$117.2B

Shares Outstanding271M

Price per Share$432.49

Exit Multiple Method

PV of Projected FCFs$55.6B

PV of Terminal Value$149.0B

Enterprise Value$204.6B

(-) Net Debt$55.7B

Equity Value$148.9B

Shares Outstanding271M

Price per Share$549.72

Pure Model Fair Value

$491.11

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
5.15%	$679.86	$729.50	$796.26	$890.84	$990.51
6.15%	$548.19	$576.23	$611.45	$657.04	$718.35
7.15%	$452.67	$470.11	$491.11	$516.87	$549.25
8.15%	$378.69	$390.26	$403.79	$419.83	$439.14
9.15%	$318.89	$326.93	$336.15	$346.80	$359.25

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$378.10

-38.9% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.20

Base Case

$491.11

-20.7% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 0.96

Bull Case

$622.66

0.6% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 0.82

Key Assumptions & Drivers• Industrials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-8.14%

Year 3 Revenue Growth11.62%

Year 5 Revenue Growth2.25%

Year 7 Revenue Growth2.25%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin22.30%

Tax Rate20.12%

Historical Capex / Rev8.90%

Terminal Capex / Rev3.50%

NWC / Revenue30.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (Industrials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance