Deere & Co's high P/E seen dropping as cyclical earnings rebound and economic recovery unfolds.

Deere & Company, a leader in agricultural equipment, currently trades at a high forward P/E of 31, which appears expensive. However, this valuation may contract quickly as cyclical earnings improve, driven by factors like potential energy and food price shocks and a North American economic recovery. Management expects a bottoming out in 2026, with some revenue segments contracting but others growing by 15%, alongside margin expansion. The company has a strong capital return history, giving back 60% of operational cash to shareholders since 2015 and projecting a 15% compound annual growth rate through 2030 excluding dividends.