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Deere The Company Valuation Report Authors: Table of Contents: Executive Summary 3 Introduction 4 2007 Highlights 6 Business Model 7 Competitive Environment 7 Expected
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Submitted by gtwarner on July 27, 2008
Category: Business
Words: 7452 | Pages: 30
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The Company Valuation Report
Authors:
Table of Contents:
Executive Summary 3
Introduction 4
2007 Highlights 6
Business Model 7
Competitive Environment 7
Expected Future Profitability 8
Free Cash Flow to Equity 10
Payout Policies 11
Ratios and Explanations 11
Cost of Equity and Cost of Debt 15
Simple Valuation Models 16
Forecasting Assumptions 18
Final Valuation & Conclusion 23
Appendix A 24
Appendix B 25
Executive Summary
Our analysis of Deere & Company shows that this company is slightly undervalued at its close price of $72.13 on 06/30/2008. Increasing commodity prices and therefore cash flows to the agricultural community is helping to grow the agricultural equipment business of Deere & Co. This growth is occurring both locally in the United States and over the entire world. As populations increase the pressure on farms to produce more, more efficiently this is driving equipment sales and is expected to continue contributing to the company’s growth for several years.
Currently Deere & Co is nearing the peak of their business cycle, though we expect three more years of strong growth with a period of decline to a low growth value of 6% by the end of 2015. This company has been in existence for over one hundred and fifty years and we see no reason that they will not continue to grow and strive for many more.
Our forecast shows a valuation of $113.77 as the value of this company. This is a valuation that seemed reasonable based on the expected future growth prospects of the company. Though our country may be heading into a recession over the next year or two, we believe that Deere & Co. with not have trouble continuing to grow through this time as they are positioning themselves to...
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