Key Highlights
- Deere delivered Q3 earnings per share of $5.10, surpassing analyst expectations of $4.69 by $0.41
- Quarterly revenue reached $12.61B, significantly exceeding the $10.81B Wall Street forecast
- Shares climbed 0.6% in early trading sessions to $584
- Company upgraded its fiscal 2026 net income forecast to a range of $4.75B-$5B from the previous $4.5B-$5B
- Regional industry forecasts were modestly reduced, with North American large-equipment sales projected to decline 15%-20%
The agricultural machinery giant posted third quarter earnings of $5.10 per share, topping the Street’s $4.69 forecast. Quarterly revenue totaled $12.61 billion, crushing the consensus estimate of $10.81 billion. Shares gained 0.6% during premarket hours, reaching $584.
In the same period last year, the company recorded earnings of $4.75 per share against approximately $7.3 billion in total sales. This quarter’s agricultural equipment division alone generated around $7.4 billion in revenue. While expansion remains measured, the trajectory appears positive.
The performance exceeded expectations, though those expectations had been tempered considerably. Agricultural producers have faced sustained income challenges, with corn valuations far below peak levels. Corn futures traded above $6 per bushel during early 2022 and surpassed $8 at certain intervals. Such commodity strength typically fuels machinery purchases. Recent market conditions haven’t provided that tailwind.
The Decline in Numbers
Deere’s equipment revenue reached its zenith at approximately $41 billion during fiscal 2023. That figure contracted to $32 billion in fiscal 2024, then to $28 billion in fiscal 2025. Projections for 2026 anticipate sales holding steady around $28 billion before bouncing back toward $30 billion in 2027.
Against this backdrop, Thursday’s earnings surprise feels less like a victory lap and more like stabilization.
The company elevated its fiscal 2026 net income projection to $4.75 billion through $5 billion, improving upon the May guidance of $4.5 billion to $5 billion. That May forecast had rattled investors, particularly since the company generated approximately $5 billion in net income during fiscal 2025.
JPMorgan’s Tami Zakaria had cautioned prior to the release that metrics from Brazilian and North American markets were deteriorating faster than the company’s official projections suggested. Her assessment proved accurate. The manufacturer lowered industry sales expectations across several key markets.
Regional Forecasts Adjusted Lower
North American large-equipment sales continue facing an anticipated 15% to 20% contraction. South American guidance shifted to a 15%-20% drop from approximately 15% previously. European projections were downgraded to flat growth from an earlier range of flat to 5% expansion.
These adjustments are pressuring profitability within the company’s large agricultural equipment division.
Zakaria subsequently reduced her fiscal 2027 earnings estimate to $20.49 per share from $22.81. The Street’s consensus for 2027 stands at $22.19, compared to $18.08 anticipated for the current fiscal year.
She maintains a Hold rating on the shares with a $570 price objective, noting that investor positioning currently leans pessimistic.
The stock currently commands a valuation of approximately 27 times forward earnings. Three years earlier, when agricultural conditions were stronger, that multiple hovered around 12 times.
Heading into Thursday’s report, DE shares had slipped roughly 1% over the trailing month but advanced about 19% over the past year. The stock has rallied approximately 31% year-to-date through this week.
InvestingPro assigns Deere’s Financial Health score a “fair performance” rating.
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