• If you are wondering whether Deere's current share price around US$580.54 reflects fair value or leaves some room on the table, the next sections will walk through what the numbers actually say.
• The stock has seen a 1.6% decline over the last 7 days, a 0.8% return over the past month and it stands at 24.4% year to date, with 20.0% over 1 year, 62.4% over 3 years and 64.0% over 5 years. This gives useful context before looking at valuation.
• Recent coverage has focused on Deere's role as a major machinery supplier and how broader sentiment toward capital goods companies may be feeding into these share price moves. That backdrop is important, because valuation ratios often shift as investors reassess how much risk or resilience they see in the sector.
• On Simply Wall St's 6 point valuation checklist, Deere scores a 2 out of 6. The rest of this article will break down what that means across different valuation methods, before finishing with a broader way to think about what "fair value" really looks like for this stock.

Deere scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Deere Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes projected future cash flows and then discounts them back to today using a required rate of return to estimate what the business might be worth at present.

For Deere, the model uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $3.7b. Analyst and extrapolated projections in the model run through 2035, with forecast free cash flow reaching $12.4b in 2030 and higher figures in the following years, all expressed in dollars and then discounted to present value.

Adding these discounted cash flows together produces an estimated intrinsic value of about $667.67 per share. Compared with the recent share price of around $580.54, the DCF output implies the stock trades at roughly a 13.1% discount, which in this model suggests that Deere is undervalued.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Deere is undervalued by 13.1%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks.

Approach 2: Deere Price vs Earnings

For profitable companies, the P/E ratio is a useful yardstick because it links what you pay for the stock to the earnings the business is currently generating. It gives you a quick way to see how much the market is willing to pay for each dollar of profit.

What counts as a “normal” or “fair” P/E depends on how investors view growth prospects and risk. Higher expected earnings growth or lower perceived risk often lines up with a higher P/E, while slower growth or higher risk tends to be associated with a lower P/E.

Deere currently trades on a P/E of 32.57x. This sits above the Machinery industry average P/E of 27.31x and also above the peer average of 26.48x that Simply Wall St uses for comparison. Simply Wall St’s Fair Ratio for Deere is 41.97x, which is its proprietary estimate of a suitable P/E after considering factors like earnings growth, profit margins, industry, market cap and company specific risks.

Because the Fair Ratio adjusts for these elements, it can offer a more tailored reference point than a simple comparison with peers or the wider industry. On this basis, Deere’s actual P/E of 32.57x is below the Fair Ratio of 41.97x, which indicates that the stock may be undervalued on this metric.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Deere Narrative

Earlier we mentioned that there is an even better way to understand valuation. Narratives let you attach a clear story about Deere to the numbers you see by linking your view of its future revenue, earnings and margins to a financial forecast and a fair value. This is done inside an easy to use tool on Simply Wall St's Community page that updates as fresh news or earnings arrive. It can help you decide what to do by comparing that Fair Value to the current price, whether you lean toward a more optimistic view closer to the US$793.0 fair value or a more cautious stance nearer US$500.0.

For Deere however we will make it really easy for you with previews of two leading Deere Narratives:

First up is the bullish case, which leans on construction strength and a recovery in large agriculture.

Fair value: US$665.10

Gap to that fair value: around 13% below the narrative fair value on the latest close.

Revenue growth assumption: 46.0%

• Focuses on rapid adoption of precision agriculture and automation that supports higher margin equipment and recurring software revenue.
• Highlights healthier farm fundamentals outside North America, combined with leaner inventories and build to retail production, as a setup for future margin strength.
• Builds a case around analysts expecting higher profit margins, rising earnings and a consensus fair value above the current share price, while flagging tariffs, incentives and competition as key risks.

The second is a bearish case, which leans more on the idea that construction and pricing tailwinds could fade.

Fair value: US$500.00

Gap to that fair value: around 16% above the narrative fair value on the latest close.

Revenue growth assumption: very small decline.

• Argues that equipment demand tied to infrastructure and data centers, along with high pricing, may be hard to sustain if backlogs soften and competition uses heavier incentives.
• Frames large agriculture customers as under pressure from higher financing costs and uncertain policy support, which could keep replacement demand and segment growth subdued.
• Points to higher tariff, material and warranty costs and ongoing technology investment as possible headwinds for margins if adoption or pricing does not fully offset these outlays.

Put side by side, these two narratives give you a clear range for what Deere might be worth based on different assumptions about future demand, pricing power and profitability. The next step is to decide which set of assumptions sits closer to your own view of the business and its risks.

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Deere on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Do you think there's more to the story for Deere? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.