What's great about the agriculture sector is that when it does well, it's not just farmers who make money. Companies that have anything to do with the greens, be it fertilizers or farm equipment, stand to gain.

Deere (NYSE: DE) is one such beneficiary. Its second-quarter revenues surged 24%, primarily because of the agriculture boom, encouraging the company to raise its full-year earnings guidance. But numbers aren't enough to decide whether the stock is worth investing in. I am going to take a deeper look to help Fools decide whether the stock is worthy of their money.

Operational performance
Higher shipment volumes and improved price realization have been boosting revenues for the Illinois-based company. While revenues grew at a compounded average rate of 6.8% over the past half-decade, what is impressive is the jump in the growth rate to 26.8% over the past year.

This strong top-line growth has helped contribute to Deere's bottom line growing at an amazingly high one-year rate of 118.4%.

Growth and stability
Deere has been quite aggressive with its spending on new products and global expansions. It keeps eyeing emerging markets such as China and India, and has been strengthening its foothold in these regions through joint ventures and tie-ups.

Deere also keeps its portfolio of products on the run by adding products continuously. Last month, it unveiled what it terms "the largest, most significant product introduction in the company's 174-year history."

Such heavy investments are obviously going to weigh on the company's debt levels, which could be the only concern on its balance sheet. Deere's total debt-to-capital ratio is high at 77.7%. However, strong operating margins and cash equivalents of $3.4 billion provide some relief. Deere's modest dividend payout ratio of 21.2% over the past 12 months also provides some margin of safety.

Value insights
Let's take a look at how Deere's valuation stacks up to some of its peers':

Company

Trailing P/E

Forward P/E

P/BV

Deere 12.8 11.0 4.3
Caterpillar (NYSE: CAT) 14.2 11.2 4.1
Cummins (NYSE: CMI) 12.8 10.4 3.7
CNH Global (NYSE: CNH) 10.4 9.6 1.0
AGCO (NYSE: AGCO) 11.8 10.5 1.4
Toro (NYSE: TTC) 15.0 13.2 5.1
IllinoisTool Works (NYSE: ITW) 12.0 11.5 2.1

Source: Capital IQ, a division of Standard & Poor's. P/E = price to earnings. P/BV = price to book value.

Deere's P/E multiples seem to be in line with its peers'. In fact, given its strong operational performance, solid capital investments and moves, it seems that its potential has not been factored in much, suggesting room for more upside potential.

Since Deere is in a capital-intensive industry, looking at price-to-book value also makes sense. Although Deere's is high, that does not necessarily mean that the stock is overvalued. The market is taking into account Deere's massive return on equity -- 37.9%, which is quite strong, even considering its debt level.

In addition to repurchases, Deere raised its dividend last quarter, the ninth quarterly dividend increase in seven years. Its dividend yield is a moderate 2.1%.

The Foolish bottom line
Deere looks well-poised to bank on growing sectors like agriculture. Strong operational performance and great expansionary moves keep me bullish on the stock. I suggest you keep an eye on it.

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