Is Deere Stock a Buy?

As ever with cyclical stocks like Deere & Company (NYSE: DE), it's essential to understand their earnings' and valuations' up-and-down nature. Unfortunately, many investors have been caught out by thinking valuations look cheap because earnings are soaring, only to watch in disappointment as earnings collapse and the valuation suddenly looks expensive. So with that warning in mind, is Deere still a good value, or is the company's strong run in recent years (up 134% in three years) about to come to an end?

The agricultural, construction, and road building machinery stock is defined as a cyclical stock because sales of its key product (agricultural machinery) are tied to trends in farmers' income, which in turn relies on crop prices. It's a relationship that generally holds up -- in case you are wondering, the jump in revenue in 2018 is partly down to the acquisition of road building equipment company Wirtgen at the end of 2017. Wirtgen had $3.4 billion in revenue in 2017.