Deere (DE) Stock Gains Momentum Following Strong Q3 Earnings Performance

Key Highlights

• Deere’s Q3 earnings per share reached $5.10, surpassing analyst expectations of $4.69 by $0.41
• Quarterly revenue totaled $12.61B, significantly exceeding the $10.81B consensus forecast
• Shares traded 0.6% higher at $584 during premarket hours
• The company elevated its fiscal 2026 net income projection to $4.75B-$5B from the previous $4.5B-$5B range
• Regional industry sales forecasts were reduced, with North American large-equipment sales projected to decline 15%-20%

The agricultural equipment manufacturer delivered third quarter earnings of $5.10 per share, surpassing the Street’s $4.69 projection. Quarterly revenue registered at $12.61 billion, substantially ahead of the $10.81 billion analyst consensus. Shares gained 0.6% in early trading, reaching $584.

Deere & Company, DE

During the same period last year, the company reported EPS of $4.75 with revenue of approximately $7.3 billion. This quarter’s agricultural equipment division alone generated roughly $7.4 billion in sales. While the expansion appears measured, the trajectory remains positive.

The performance exceeded relatively modest expectations, though those expectations reflect ongoing industry challenges. Agricultural producer income has faced sustained headwinds, with corn pricing considerably below previous peaks. Corn traded above $6 per bushel in early 2022, reaching over $8 at certain points. Such commodity strength typically fuels machinery purchases. Current market conditions haven’t provided that catalyst.

Extended Downturn

Deere’s equipment revenue reached its zenith at approximately $41 billion during fiscal 2023. The figure declined to $32 billion in fiscal 2024, dropping further to $28 billion in fiscal 2025. Projections for 2026 anticipate sales holding steady around $28 billion before rebounding toward $30 billion in 2027.

This backdrop transforms Thursday’s earnings victory into more of a modest reprieve than a triumphant breakthrough.

The company upgraded its fiscal 2026 net income forecast to a range of $4.75 billion to $5 billion, improving upon the $4.5 billion to $5 billion guidance issued in May. That earlier May projection had underwhelmed market participants, particularly since the company generated approximately $5 billion in net income during fiscal 2025.

JPMorgan analyst Tami Zakaria had warned prior to the earnings release that Brazilian and North American data were tracking below Deere’s own projections. Her assessment proved accurate. The company reduced its industry sales forecasts across several geographic markets.

Regional Guidance Reduced

North American large-equipment sales continue to face an anticipated 15% to 20% contraction. South American guidance was adjusted downward to a 15%-20% decrease from the earlier estimate of approximately 15%. European projections were lowered to flat growth, down from a previous forecast of flat to up 5%.

These adjustments are creating margin pressure within Deere’s large agriculture equipment division.

Zakaria subsequently lowered her fiscal 2027 EPS forecast to $20.49 from $22.81. The overall Wall Street consensus stands at $22.19 for 2027, compared to the $18.08 anticipated for the current year.

She maintains a Hold rating on shares with a $570 price objective, observing that investor sentiment remains predominantly bearish.

The stock currently commands a forward earnings multiple of approximately 27 times. Three years earlier, when agricultural market conditions were stronger, that valuation stood closer to 12 times earnings.

Prior to Thursday’s session, DE shares had declined roughly 1% during the preceding month while advancing approximately 19% over the trailing twelve months. The stock had appreciated around 31% year-to-date entering the current week.

According to InvestingPro, Deere’s Financial Health score receives a “fair performance” rating.

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