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Deere & Company (DE) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Deere & Company (DE)

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Intrinsic Value (DCF)

Current$515.04
→
Intrinsic$121.50
-76%
$13.77$121.50$335.76
Current price reflects execution expectations above 16% growth — not unreasonable for quality businesses.
Range: Bear $14 → Bull $336. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $336).
Discount ↓Growth →12%14%16%18%
8%$202$237$275$315
10%$73$97$121$148
12%$5$22$41$60
14%$0$0$0$6

Bull Case

  • Bull case ($336) with 20% growth, 8% discount rate

Bear Case

  • Bear case ($14) implies 97% downside at 13% growth, 12% discount
  • Trading 76% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($336) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$3.76B
Year 2$4.37B
Year 3$5.08B
Year 4$5.91B
Year 5$6.88B
Terminal$109.00B

📐 Model Inputs

Growth Rate16.3%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$3.23BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is DE stock undervalued or overvalued?
🔴 OVERVALUED

DE trades at $515.04 vs. our DCF-derived intrinsic value of $104.95, implying -78% downside. Using a 9.5% WACC and 16.3% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($254.73) suggests limited upside.

What is DE's intrinsic value?

Using a 5-year DCF model: Base FCF of $3.23B, projected at 16.3% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $55.66B net debt and dividing by 0.27B shares: Bear $2.77 | Base $104.95 | Bull $254.73. Current price $515.04 implies -78% to base case.

How is DE's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 16.3% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($84.17B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 26.1x.