Last November, when I wrote a Deere John notice for Deere (NYSE:DE), my conclusion was that those buying the stock weren't paying a dear price for it.

My logic back then was that the stock was selling for 12.7 times trailing earnings -- hardly expensive. Even competitor Caterpillar (NYSE:CAT) was trading for 17 times earnings, and that was a premium to the 16 times trailing earnings garnered by fellow construction-industry peers.

Fast-forward to the latest quarterly report, and you see that that revenue soared 18% and net income rocketed 30% from the year-ago quarter. So, the stock's up, right?

Wrong!

Not only is the stock down around 5% so far today, but it also closed yesterday $0.15 below the $69.50 a share it fetched when I wrote about it in November. Deere's been dead money, and now Wall Street is discounting it some more. Higher steel prices (a key raw material) are no doubt holding back earnings, although net income is still up sharply.

So, is today's decline linked to a bad outlook? The stock market doesn't have exit polls, although things could be interesting if it did. But last quarter, the company was expecting 2005 revenue to increase 2% to 7%. Now it expects sales to increase from 6% to 8%. That sounds good, although the market may have hoped for even more. Earnings are still forecast to be $1.5 billion -- or, at $5.97 a share (based on 251 million shares), up nicely from the $5.56 earned last year.

The bigger news would seem to be that the company reiterated an unchanged earnings estimate for 2005 -- an estimate that's a whole buffalo nickel below the $6.02 that the 17 analysts following the company were expecting. Well, don't overlook that last quarter, those 17 analysts thought 2005 earnings would be $5.74 a share.

Get this: Deere is trading at 11 times 2005 forecasted earnings. That below-market valuation reflects at least two basic risks -- the cyclical nature of the equipment market and Deere's large long-term debt load. Exact estimates aside, analysts expect the earnings increases to continue through 2006, and there is ample free cash flow to help solidify the balance sheet.

Deere is hardly dearly priced (yes, I know I said that once before). Although the 1.6% dividend yield would not tempt the Motley Fool Income Investor newsletter, I'd contend that today's discounted stock price makes a good value even better.

Fool contributor W.D. Crotty's grandson loves his John Deere (toy) tractor. W.D. does not own stock in the companies mentioned. Click here to see the Motley Fool's disclosure policy.