Deere & Company

(New York Stock Exchange)
Back to all articles
Very Bearish -75

3 Reasons to Sell DE and 1 Stock to Buy Instead

AI-generated analysis

πŸ“‰ Despite broader market declines, Deere's stock price has surged 33.6% to $609.30 per share since October 2025.

πŸ“‰ Analysts cite three main reasons to sell the stock: tepid long-term sales growth, declining ROIC, and excessive debt.

πŸ“Š Deere's five-year compounded annual sales growth rate was only 4.8%, falling short of the industrials sector benchmark.

πŸ“‰ The company's Return on Invested Capital (ROIC) has decreased significantly over recent years, indicating fewer profitable opportunities.

πŸ’° Deere holds $62.48 billion in debt against just $8.20 billion in cash, resulting in a net-debt-to-EBITDA ratio of 7Γ—.

⚠️ This high level of leverage increases borrowing costs and risks credit downgrades if profitability declines or the market turns.

πŸ“‰ At 30.5Γ— forward P/E, analysts believe excessive optimism is already priced into Deere's current valuation.

πŸ’‘ StockStory experts recommend avoiding Deere due to these quality concerns despite its recent performance gains.

πŸ’Έ Investors are advised to seek better opportunities elsewhere in the market rather than taking on Deere's risks.

πŸš€ Instead of Deere, analysts suggest looking at top digital advertising platforms riding the creator economy trend.

πŸ€– StockStory's AI system previously identified high-performing stocks like Palantir, AppLovin, and Nvidia before their massive runs.

πŸ” The firm recommends using their "Top 6 Stocks for This Week" list to find quality names separated from expensive ones.

πŸ“ˆ Past winners in their portfolio include Nvidia with a 1,326% return since June 2020 and Exlservice with a 354% five-year gain.

⚠️ Market rotation is occurring rapidly as AI takes down sectors unexpectedly, requiring careful selection beyond just good companies.

πŸ“Š Deere's current situation warns against incremental borrowing which could lead to insolvency risks for long-term investors.

πŸ’‘ Management must improve its balance sheet and increase profitability before the company can be considered attractive again.

Bullish Signals
  • Deere has surged ahead of the broader market, climbing 33.6% despite the S&P 500 being down 1.8% since October 2025.
  • The company reported solid quarterly results that drove its recent stock price increase to $609.30 per share.
Risk Factors
  • Deere's long-term sales growth is only 4.8% compounded annual growth rate over the last five years, which fell short of the industrials sector benchmark.
  • The company's Return on Invested Capital (ROIC) has decreased significantly over recent years, indicating fewer profitable growth opportunities.
  • Deere holds $62.48 billion in debt compared to only $8.20 billion in cash, creating a substantial imbalance.
  • The company's net-debt-to-EBITDA ratio is 7Γ— based on $8.27 billion of EBITDA over the last 12 months, signaling it is overleveraged.
  • At this high level of debt, incremental borrowing becomes increasingly expensive and credit agencies could downgrade the rating if profitability falls.
  • Deere's stock trades at a premium 30.5Γ— forward P/E valuation, suggesting excessive optimism may already be priced in.
  • If market conditions turn unexpectedly, Deere could face liquidity risks given its high debt burden and limited cash reserves.
Full Analysis
The broader market has faced challenges with the S&P 500 down 1.8% since October 2025, while Deere (DE) has significantly outperformed with its stock price climbing 33.6% to $609.30 per share following solid quarterly results. However, analysts express low confidence in the company despite its recent gains, citing three primary concerns regarding its long-term quality and financial health. First, Deere’s sales growth has been tepid at a compounded annual rate of 4.8% over the last five years, which falls short of sector benchmarks for industrials. Second, the company's Return on Invested Capital (ROIC) has decreased significantly over recent years, suggesting fewer profitable growth opportunities despite management's past successes. Third, Deere's debt situation presents substantial risk for long-term investors. The company carries $62.48 billion in debt against only $8.20 billion in cash on its balance sheet, resulting in a net-debt-to-EBITDA ratio of 7 times based on an EBITDA of $8.27 billion over the last 12 months. This level of leverage is considered overleveraged by analysts, as incremental borrowing becomes more expensive and credit agencies could downgrade the rating if profitability declines. Additionally, the stock's current valuation of 30.5Γ— forward P/E suggests excessive optimism is already priced in at this share price. Consequently, analysts recommend against buying Deere and suggest exploring alternatives in sectors like digital advertising or high-quality stocks flagged by their AI system, which have previously identified winners such as Palantir, AppLovin, and Nvidia with substantial returns.