John Deere's unions did not agree to new contract offers which included an $8,500-one-time signing bonus. Do they have a legitimate "gripe?"
Deere has 70,000 employees; not all of them union.
A one-time bonus of $9,000 per employee = $630 million, a bit over one-half billion dollars.
Deere's:
- cash flow: $7.74 billion
- total cash: $7.03 billion
- P/E: 19.61
Deere has 310 million shares outstanding:
- earnings per share: $17.24 / share
- 310 million x 17.24 = $5.34 billion
- if that one-time bonus was subtracted "immediately" from earnings:
- $5.34 billion - 0.630 billion = $4.71 billion
- $4.71 billion / 310 million = $15.19 / share
- 5 x 310 million x 17.24 = $26.7 billion
- $26.722 billion - 0.630 billion = $26.72137 billion
- $26.72137 billion / 1.55 billion = $17.24 / share.
I'm not going to do the math, but the union could probably argue for a one-time signing bonus of $20,000 vs the proposed $8,500 bonus.
An investor could have bought 1,000 shares of DE on March 1, 2020 for $138,000.
Yesterday, 1,000 shares of DE were worth $355,000.
That's in one year. Without the dividend.
This will be fascinating to follow.
Management has options; it will be interesting if the CEO / board of directors can think outside of the box.
Guess we'll see who blinks first. Kind of expensive to stay out on strike and it will take a while to recoup lost wages..
ReplyDelete"Strike pay will be available for Deere employees. According to the UAW, weekly strike pay is $275 per week, or $55 per day, beginning on the eighth day. A bonus check is paid the week prior to the Thanksgiving and Christmas holidays."
Exactly what I was thinking. Years ago, we had a close friend, paid well, but employees went on strike --- became a prolonged strike -- he said then, that generally every time they went on strike, took about two years to recover.
Delete