TIVP004: John Deere (DE): Sowing the Seeds of Growth w/ Shawn O’Malley

The Intrinsic Value Podcast - The Investor’s Podcast Network

The Investor's Podcast Network

Investing, Education, Business

4.6 • 593 Ratings

🗓️ 26 January 2025

⏱️ 69 minutes

🔗️ Recording | iTunes | RSS

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Summary

In today’s episode, Shawn O’Malley (@Shawn_OMalley_) breaks down John Deere, a company as American as Levi’s blue jeans and apple pie. John Deere is a fascinating business because it has survived for nearly two hundred years and remained an industry leader for much of that time, continually building their world-famous green-and-yellow tractors. Deere is about much more than tractors, though, and you might be surprised to learn that its story is really about cutting-edge technology. Deere’s equipment is extremely sophisticated, and the company is working on autonomous tractors that may very well be the future of agriculture. After breaking down Deere’s business, Shawn shares his thoughts on the company’s valuation and his decision on whether to add it to The Intrinsic Value Portfolio he’s building each week on the show, plus so much more! Prefer to watch? Click here to watch this episode on YouTube. IN THIS EPISODE, YOU’LL LEARN 00:00 - Intro 01:56 - How John Deere was founded. 19:24 - Why farmers love John Deere so much. 24:24 - How the company has embraced cutting-edge technology. 33:04 - Where Deere stacks up against the competition. 41:58 - Why subscriptions are enabling Deere’s business to be less cyclical. 55:19 - How to value a cyclical company. 56:53 - What to make of Deere’s seemingly large amount of debt. 01:06:40 - Whether Shawn thinks the stock is attractively valued. And much, much more! *Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Kyle and the other community members. Get smarter about valuing businesses in just a few minutes each week through our newsletter, The Intrinsic Value Newsletter. Leandro’s article on John Deere for Best Anchor Stocks. Leandro’s Twitter account. Value Investors Club pitch of John Deere. David Magee's The John Deere Way. Aswath Damodaran on valuing cyclical businesses. Attend the 2025 Berkshire Hathaway shareholder meeting and meet-ups with The Investors Podcast Network. Check out the books mentioned in the podcast here. Enjoy ad-free episodes when you subscribe to our Premium Feed. NEW TO THE SHOW? Follow our official social media accounts: X (Twitter) | LinkedIn | Instagram | Facebook | TikTok. Browse through all our episodes (complete with transcripts) here. Try Shawn's favorite tool for picking stock winners and managing our portfolios: TIP Finance. Enjoy exclusive perks from our favorite Apps and Services. Learn how to better start, manage, and grow your business with the best business podcasts. SPONSORS Support our free podcast by supporting our sponsors: TurboTax Public Airbnb Connect with Shawn: Twitter | LinkedIn | Email HELP US OUT! Help us reach new listeners by leaving us a rating and review on Spotify! It takes less than 30 seconds and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

Transcript

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0:00.0	You're listening to TIP.
0:02.8	Hey, hey, welcome back to the Intrinsic Value Podcast.
0:06.4	Last week, I broke down Ulta's business model and valuation and concluded it was
0:11.2	attractively priced enough to earn a spot in our intrinsic value portfolio.
0:15.7	Ulta is the first edition to the portfolio that I'll be building each week on the show.
0:19.7	So if you miss that episode, make sure to go back and listen to it. This week, I'm taking a look at John Deere, an all-American company that's been around for almost 200 years. Whether you live in a city, the suburbs, or the countryside, I'm sure you're familiar with John Deere and their iconic tractors. As boring as that might sound, I think you'll be pleasantly surprised
0:38.4	to learn that John Deere is so much more than an equipment manufacturing business. In fact,
0:43.3	John Deere is very much a tech company in some ways, as well as a financial services company.
0:47.5	It's actually a fascinating business model, and one that has historically been quite cyclical,
0:52.8	given its dependence on spending fluctuations
0:55.0	on new equipment and agriculture.
0:57.6	But the company is in the process of trying to tamp down that cyclicality, which could make
1:02.2	its earnings much steadier.
1:03.9	I'll go through the nuances of the stalwart brand's business, and, as always, try to estimate
1:08.2	its fair value at the end of the episode and decide whether
1:11.1	or not it deserves a place in the intrinsic value portfolio at current valuation levels.
1:16.4	So let's dive into the story of John Deere, a company as American as Apple Pie and Levi-Gines.
1:25.1	You're listening to the Intrinsic Value podcast by the Investors Podcast Network.
1:30.4	Since 2014, with over 180 million downloads, we've learned directly from the world to best
1:36.2	investors.
1:37.2	Now, we're applying those lessons to analyze businesses and investment opportunities every
1:42.8	week, helping you uncover intrinsic value.
	...

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