Insider buying can indicate that a stock is undervalued. This is due to the fact that insiders are typically good at recognizing when the market is undervaluing their businesses.
In this report, we are going to highlight some recent insider buying at Deere & Co (DE:US). Deere is an American company that manufactures agricultural machinery, heavy equipment, forestry machinery, diesel engines, drivetrains for heavy equipment, and lawn care equipment. It’s listed on the New York Stock Exchange and currently has a market cap of $116.22 billion.
Insider Buying at Deere
Our insider transaction data shows that on June 6, board member Tami Erwin purchased 675 DE shares at a price of $371.05 per share. This trade cost the insider over $250,000 and increased her total holding to 3,039 shares.
29% Increase in Holding
This trade is notable because it has increased the size of Ms. Erwin’s holding by 29%. The fact that the insider has bumped up her stake by nearly a third suggests that she sees a lot of value in the stock right now.
It’s worth noting that insider purchases at Deere are not very common. Our records show that there have only been a total of three purchases since August 2014. This is the largest of the three by a wide margin.
Value on Offer
Deere stock has underperformed in 2022 and as a result, it does appear to offer some value today. Currently, analysts are expecting the company to generate earnings per share of $31.90 for the fiscal year ending October 30, 2023. That puts the stock on a forward-looking price-to-earnings (P/E) ratio of less than 13 right now – well below the market average.
It’s worth noting that in Deere’s recent Q2 results, the company raised its net income guidance for the year, thanks to healthy demand for farming equipment. It now expects net income of between $9.25 billion and $9.50 billion, up from a previous forecast of $8.75 billion to $9.25 billion.
“Based on Deere’s results to date, it’s clear we are well on our way to another year of exceptional achievement,” commented Chairman and CEO John May.
In light of the low valuation here, and the increase to guidance, we see the insider buying as a bullish development.