Deere & Company
DE
$681.46
+0.85%
Deere & Company is the world's leading manufacturer of agricultural equipment and a major producer of construction and forestry machinery, operating through four reporting segments: Production & Precision Agriculture (PPA), Small Agriculture & Turf (SAT), Construction & Forestry (CF), and a captive financial services arm, John Deere Financial. Its competitive identity rests on an unrivaled dealer network of over 2,000 North American locations reaching more than 100 countries, a premium brand that commands pricing power, and an increasingly software- and autonomy-driven precision-ag platform that is reshaping how farmers manage fields. The current investor narrative centers on whether the agricultural equipment cycle has finally bottomed: management raised full-year guidance and the stock hit an all-time high in early September 2026, with analysts pointing to a farming rebound and projected EPS growth through 2028. That optimism is tempered by cyclical risks, elevated fertilizer and input costs tied to Middle East tensions, and a soft large-ag forecast that briefly overshadowed an otherwise strong earnings beat in May. The bull-bear debate now hinges on whether precision-ag adoption and a replacement-cycle recovery can offset farm-income pressure and competitive threats from rivals like Caterpillar moving into autonomous tractors.…
DE
Deere & Company
$681.46
Related headlines
Investment Opinion: Should I buy DE Today?
Rating: Hold. Deere is a high-quality industrial with a dominant market position and a cyclical recovery underway, but the current valuation already reflects much of the optimism. The analyst consensus is 'buy' with a mean of 2.0 and an average target of $685.19, just 1.4% above the current price, suggesting limited near-term upside. The core thesis is that precision-ag adoption and a replacement-cycle recovery will drive earnings growth into FY2028, but this is largely priced in at 29.79x forward earnings.
Supporting evidence includes revenue growth of 6.74% YoY in Q2 FY2026, a 19.37% ROE, and $3.768 billion in trailing FCF. However, the forward PE of 29.79x exceeds the trailing PE of 24.89x, implying expected earnings decline, and the EV/EBITDA of 15.51x is a 30% premium to the sector. The dividend yield of 1.37% is modest, and the payout ratio of 34.2% is sustainable but not exceptional. The stock's 41.83% one-year gain has outpaced the S&P 500's 16.22%, leaving it extended and vulnerable to profit-taking.
Key risks that could invalidate the thesis include a delay in the agricultural recovery, margin compression from rising fertilizer costs, and competitive threats from autonomous tractor entrants. The rating would upgrade to Buy if the forward PE compresses below 25x or if FY2027 EPS estimates are revised upward by more than 10%. It would downgrade to Sell if revenue growth decelerates below 5% or if gross margins fall below 35%. Relative to its history, the stock is fairly valued to slightly overvalued; the trailing PE of 24.89x is above the 2023-2024 average of 15-18x, but below the peak of 54.76x. The valuation verdict is fairly valued, with limited margin of safety.
Sign up to view all
DE 12-Month Price Forecast
Deere is a high-quality cyclical industrial in the early stages of a recovery, but the stock's 41.83% one-year gain has already priced in much of the optimism. The forward PE of 29.79x exceeding the trailing PE of 24.89x is a red flag, suggesting the market expects near-term earnings decline, while the average analyst target offers minimal upside. The bull case hinges on precision-ag adoption and a farm-income rebound driving EPS growth into FY2028, but competitive threats and input-cost inflation pose risks. I would upgrade to bullish if FY2027 EPS estimates are revised upward by more than 10% or if the stock pulls back to a more attractive valuation below 22x forward earnings. I would downgrade to bearish if revenue growth decelerates below 5% or if gross margins fall below 35%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Deere & Company's 12-month outlook, with a consensus price target around $688.44 and implied upside of +1.0% versus the current price.
Average Target
$688.44
0 analysts
Implied Upside
+1.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$500 - $813
Analyst target range
Deere is covered by 22 analysts with a consensus recommendation of "buy" and a recommendation mean of 2.0, indicating a moderately bullish stance. The average price target is $685.19, which implies just +1.4% upside from the current price of $675.74, a notably thin margin that suggests the stock has already caught up to analyst expectations. The consensus leans constructive but not aggressive, with the recent institutional ratings showing a mix of Buy/Outperform (Truist, RBC, DA Davidson, Barclays) and Neutral/Hold (Citigroup, JP Morgan, B of A, Jefferies), and no recent downgrades, which supports the view that sentiment is stable-to-improving.
The target range spans from a low of $500.00 to a high of $813.18, a wide $313.18 spread that signals significant disagreement about the cycle's trajectory. The high target of $813.18 implies roughly +20% upside and assumes multiple expansion alongside accelerating precision-ag adoption and a full farm-income recovery, while the low target of $500.00 implies -26% downside and prices in margin compression, a delayed replacement cycle, and competitive losses to autonomous-tractor entrants. The wide spread, combined with the average target sitting only 1.4% above the current price, suggests the stock is fairly valued near-term and that further gains require either upward estimate revisions or a confirmed cyclical upturn; the estimated EPS average of $26.95 for the coming year, against a forward PE of 29.79x, implies the market is already discounting much of the recovery.
Drowning in data?
Find the real signal!
Bulls vs Bears: DE Investment Factors
The bull case rests on a clear cyclical recovery, with revenue up 6.74% YoY in Q2 FY2026 and broad-based growth across ag, construction, and turf segments, supported by a 19.37% ROE and strong cash generation. However, the bear case is equally compelling: the forward PE of 29.79x exceeds the trailing PE of 24.89x, implying expected earnings decline, and the average analyst target of $685.19 offers only 1.4% upside, suggesting the stock is fully valued near-term. The most important tension is whether the agricultural replacement cycle can accelerate enough to justify the premium multiple, or whether margin pressure from input costs and competitive threats will cap upside. Currently, the bear evidence on valuation and near-term upside appears slightly stronger, but the bull case on long-term precision-ag adoption and cash flow remains intact. The resolution of this debate hinges on whether FY2027 EPS estimates are revised upward, which would validate the recovery thesis and support multiple expansion.
Bullish
- Revenue reaccelerating after cyclical trough: Q2 FY2026 revenue of $13.369 billion grew 6.74% year-over-year and 39.1% sequentially from Q1's $9.611 billion, marking a clear inflection. The prior three quarters also showed growth: Q1 FY2026 +16.3% YoY, Q4 FY2025 +11.7% YoY, and Q3 FY2025 +8.3% YoY, indicating the replacement cycle is broadening across segments.
- Precision ag and autonomy optionality: Deere's precision-ag platform is increasingly software- and autonomy-driven, providing a capital-light growth overlay on its manufacturing base. This technology differentiation supports pricing power, as evidenced by a 36.48% trailing gross margin and 18.84% operating margin, well above typical industrial peers.
- Strong profitability and ROE: Trailing return on equity is 19.37%, and Q2 FY2026 net income was $1.773 billion on a 13.26% net margin. Operating margin of 22.48% in Q2 recovered sharply from Q1's 16.18%, reflecting favorable production costs and mix.
- Analyst consensus buy with upside: 22 analysts rate DE a 'buy' with a mean recommendation of 2.0 and an average price target of $685.19, implying +1.4% upside. The high target of $813.18 suggests +20% upside if the farm recovery accelerates and precision-ag adoption outpaces expectations.
Bearish
- Forward PE exceeds trailing PE: The trailing PE of 24.89x is below the forward PE of 29.79x, an unusual inversion implying the market expects earnings to decline in the coming year. This suggests investors are paying up today for a recovery that consensus estimates project may not materialize until FY2027-2028.
- Thin analyst upside and wide target spread: The average analyst target of $685.19 is only 1.4% above the current price of $675.74, indicating the stock has already caught up to expectations. The target range spans $500 to $813.18, a $313 spread that signals significant disagreement about the cycle's trajectory.
- Margin compression and input cost pressure: Q2 FY2026 gross margin of 38.17% declined 108 basis points from 39.25% in Q2 FY2025, and net income fell slightly to $1.773 billion from $1.804 billion. Rising fertilizer costs tied to Middle East tensions and elevated interest expense of $712 million per quarter could further pressure margins.
- Elevated leverage and interest burden: Debt-to-equity stands at 2.46x, high for an industrial, with quarterly interest expense of $712 million. If rates remain elevated, this burden could constrain earnings growth and free cash flow, especially given the seasonal working-capital swings that produced negative $1.578 billion FCF in Q1 FY2026.
DE Technical Analysis
Deere is in a powerful, sustained uptrend, with the shares up 41.83% over the past year and 44.76% year-to-date, decisively outperforming the S&P 500's 16.22% and 12.08% respective gains. At a current price of $675.74, the stock sits at roughly 91% of its 52-week range (low of $433.00, high of $705.88), just 4.3% below its all-time high. This positioning signals strong momentum but also leaves little margin for error, as the stock is extended well above any reasonable moving-average support and vulnerable to profit-taking on any guidance disappointment. The 52-week range itself spans a wide $272.88, or 63% of the low, underscoring how volatile this cycle has been.
Short-term momentum is accelerating but showing early signs of fatigue. The 1-month change of +9.03% and 3-month change of +17.02% both outpace the 6-month gain of +17.01%, indicating the bulk of the advance has come in the last quarter, with relative strength versus SPY of +10.09% over one month and +13.98% over three months. However, the most recent sessions reveal a stall: the stock closed at $675.74 on September 11, down 0.32% on the day and 3.2% below the September 2 intraday peak of $698.37, following a parabolic run from $580.63 on August 19 to $698.37 in just ten sessions. That kind of vertical move typically invites mean reversion, and the failure to hold above $690 suggests buyers are exhausting near-term.
Key technical levels are clearly defined: resistance sits at the 52-week high of $705.88, while support rests at the 52-week low of $433.00, with intermediate support likely around the $630-$650 breakout zone from late August. A decisive break above $705.88 would confirm the all-time-high breakout and could open a measured move toward $750+, whereas a breakdown below $630 would signal a failed breakout and likely retest of the $580 area. With a beta of 0.911, Deere is slightly less volatile than the broader market, which is unusual for a cyclical industrial and suggests the market is treating it as a quality compounder; the maximum drawdown of -20.13% over the period reinforces that this is a relatively contained risk profile for position-sizing purposes.
Beta
0.91
0.91x market volatility
Max Drawdown
-20.1%
Largest decline past year
52-Week Range
$433-$706
Price range past year
Annual Return
+44.8%
Cumulative gain past year
| Period | DE Return | S&P 500 |
|---|---|---|
| 1m | +11.9% | -2.0% |
| 3m | +16.4% | +1.4% |
| 6m | +19.3% | +15.0% |
| 1y | +44.8% | +15.7% |
| ytd | +46.0% | +11.6% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
DE Fundamental Analysis
Deere's revenue trajectory is reaccelerating after a cyclical trough. The most recent quarter (Q2 FY2026, ended May 3, 2026) delivered revenue of $13.369 billion, up 6.74% year-over-year versus $12.525 billion in the prior-year quarter, and up 39.1% sequentially from Q1's $9.611 billion. The multi-quarter trend shows a clear inflection: Q1 FY2026 revenue of $9.611 billion was up 16.3% from Q1 FY2025's $8.262 billion, while Q4 FY2025's $12.094 billion grew 11.7% over Q4 FY2024's $10.827 billion. Within segments, Production & Precision Ag is the largest contributor at $4.403 billion, followed by Small Agriculture at $2.339 billion, Compact Construction Equipment at $2.167 billion, and Financial Products at $1.457 billion, with Roadbuilding ($1.27 billion), Turf ($1.063 billion), and Forestry ($294 million) rounding out the mix. The broad-based growth across ag, construction, and turf implies the replacement cycle is broadening rather than concentrated, which strengthens the durability of the recovery thesis.
Profitability is robust and margins are expanding. Q2 FY2026 net income was $1.773 billion on a 13.26% net margin, with gross margin of 38.17% and operating margin of 22.48%, both improving from Q1's 34.66% gross and 16.18% operating margins. The year-over-year comparison is more nuanced: Q2 FY2025 posted a 39.25% gross margin and 23.02% operating margin, so gross margin compressed about 108 basis points annually even as net income rose from $1.804 billion to $1.773 billion. The sequential margin recovery from Q1 to Q2 is the more important signal, as it reflects favorable production costs and mix; the trailing twelve-month net margin of 11.25% and operating margin of 18.84% remain healthy for heavy machinery, comfortably above typical industrial peers. The company's 36.48% gross margin and 18.84% operating margin indicate strong pricing power despite input-cost inflation.
Balance sheet and cash flow metrics reveal a leveraged but cash-generative business. Debt-to-equity stands at 2.46x, elevated but typical for a captive-finance industrial, while the current ratio of 2.31x signals solid short-term liquidity. Free cash flow on a trailing twelve-month basis is $3.768 billion, though quarterly FCF is lumpy: Q2 FY2026 generated $874 million, Q1 was negative $1.578 billion due to seasonal working-capital build, and Q4 FY2025 delivered $2.628 billion. Return on equity is a strong 19.37%, and return on assets is 3.76%, the latter depressed by the finance arm's asset-heavy book. With $7.905 billion in cash at the end of Q2 and operating cash flow of $1.932 billion in the quarter, Deere funds its $1.058 billion quarterly capex and $437 million dividend internally, though the 2.46x leverage and $712 million quarterly interest expense warrant monitoring if rates stay elevated.
Quarterly Revenue
$13.4B
2026-05
Revenue YoY Growth
+6.7%
YoY Comparison
Gross Margin
38.2%
Latest Quarter
Free Cash Flow
$3.8B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is DE Overvalued?
Because Deere is solidly profitable with trailing net income of $1.773 billion in the latest quarter and positive EPS, the PE ratio is the appropriate primary metric. The trailing PE of 24.89x compares to a forward PE of 29.79x, an unusual inversion where the forward multiple exceeds the trailing multiple, implying the market expects earnings to decline in the coming year even as the stock rallies. This gap is a critical red flag: investors are paying up today for a recovery that consensus estimates suggest may not materialize until FY2027-2028, when EPS is projected to grow significantly. The PEG ratio of -0.89 is not meaningful given the negative growth denominator, but the PS ratio of 2.80x and EV/EBITDA of 15.51x provide cleaner cross-checks.
Against the broader Industrials sector, Deere trades at a premium on most metrics. The PS ratio of 2.80x and EV/Sales of 4.64x are elevated for agricultural machinery, where peers like AGCO and CNH typically trade at 0.5-1.0x sales, though Deere's premium is justified by its dominant market share, 36.48% gross margin, and 19.37% ROE versus peers' mid-single-digit returns. The EV/EBITDA of 15.51x sits above the sector average of roughly 11-12x, a premium of approximately 30%, reflecting Deere's superior profitability and precision-ag technology optionality. The PB ratio of 4.82x is rich but consistent with a capital-light software overlay on a capital-intensive manufacturing base.
Historically, Deere's valuation is in the middle-to-upper portion of its own range. Over the past three years, the trailing PE has ranged from a low of 9.86x (Q2 FY2023) to a high of 54.76x (Q1 FY2026), with the current 24.89x sitting above the mid-point but well below the peak. The PS ratio of 2.80x is near the low end of its historical band, which ranged from 6.57x to 15.92x over the past three years, though this comparison is distorted by the finance arm's revenue accounting. The current PE of 24.89x versus the 2023-2024 average of roughly 15-18x suggests the market is pricing in optimistic recovery expectations, leaving limited room for disappointment if the ag cycle stalls.
PE
24.9x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 10x~38x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
15.5x
Enterprise Value Multiple
Investment Risk Disclosure
Deere's financial risks are manageable but non-trivial. The debt-to-equity ratio of 2.46x is elevated, typical for a captive-finance industrial, but quarterly interest expense of $712 million consumes a meaningful portion of operating income. Free cash flow is lumpy, with Q1 FY2026 negative $1.578 billion due to seasonal working-capital build, though trailing twelve-month FCF of $3.768 billion remains solid. Margin pressure is evident: Q2 FY2026 gross margin of 38.17% declined 108 basis points year-over-year, and net income slipped to $1.773 billion from $1.804 billion, highlighting sensitivity to input costs and pricing. Revenue concentration in Production & Precision Ag ($4.403 billion in Q2) ties performance to farm income, which is vulnerable to commodity price swings and fertilizer cost inflation.
Market and competitive risks are significant. The stock trades at a premium to peers, with an EV/EBITDA of 15.51x versus the sector average of 11-12x, and a PS ratio of 2.80x versus AGCO and CNH at 0.5-1.0x. This premium leaves little room for disappointment; any guidance miss could trigger multiple compression. The beta of 0.911 suggests lower volatility than the market, but sector rotation away from industrials could still pressure shares. Recent news highlights emerging threats: Caterpillar's acquisition of Monarch Tractor to accelerate autonomous tech, and rising fertilizer costs due to Middle East tensions, which could dampen farmer spending. Additionally, a hawkish Fed and geopolitical risks are pressuring equities, with defensive sectors benefiting at the expense of cyclicals like Deere.
The worst-case scenario involves a delayed agricultural recovery, margin compression from sustained input-cost inflation, and competitive share loss. In this scenario, the stock could retest its 52-week low of $433.00, representing a 35.9% decline from the current price of $675.74. The analyst low target of $500.00 implies a 26.0% downside, aligning with a bear case where FY2027 EPS estimates are cut and the multiple compresses to the lower end of its historical range. A max drawdown of -20.13% over the past period shows that sharp corrections are possible; a more severe downturn could see the stock fall to the $500-$550 range, a loss of 18.6% to 26.0% from current levels.
FAQ
The most severe risk is a delayed agricultural recovery, which could cut FY2027 EPS estimates and compress the multiple, sending the stock to $500 (analyst low target). Financial risks include elevated debt-to-equity of 2.46x and quarterly interest expense of $712 million, which could pressure earnings if rates stay high. Competitive risks are rising, with Caterpillar's acquisition of Monarch Tractor threatening Deere's autonomous technology edge. Macro risks include rising fertilizer costs due to Middle East tensions, which could dampen farmer spending, and a hawkish Fed that could trigger sector rotation away from industrials. Margin compression is also a concern, as Q2 FY2026 gross margin declined 108 basis points year-over-year to 38.17%.
The 12-month forecast has three scenarios: bull case (25% probability) targets $750-$813, assuming accelerated farm recovery and EPS above $30; base case (55% probability) targets $650-$720, assuming gradual recovery and EPS meeting consensus of $26.95; bear case (20% probability) targets $500-$580, assuming delayed recovery and margin compression. The base case is most likely, with the stock trading around the analyst average target of $685.19. The key assumption is that U.S. farm income stabilizes and gross margins hold above 36%. However, the wide analyst target range of $500-$813.18 reflects significant uncertainty about the cycle's trajectory.
DE appears fairly valued to slightly overvalued relative to its history and peers. The trailing PE of 24.89x is above the 2023-2024 average of 15-18x, though below the peak of 54.76x. The EV/EBITDA of 15.51x is a 30% premium to the sector average of 11-12x, and the PS ratio of 2.80x is well above peers like AGCO and CNH at 0.5-1.0x. The market is paying a premium for Deere's dominant market share, 36.48% gross margin, and precision-ag optionality. However, the forward PE of 29.79x exceeding the trailing PE suggests the market expects earnings to decline near-term, which may limit upside. The valuation implies the market expects a strong recovery in FY2027-2028, leaving little room for disappointment.
From a risk/reward perspective, DE is a Hold rather than a strong Buy at current levels. The stock trades at $675.74, just 1.4% below the average analyst target of $685.19, and the forward PE of 29.79x exceeds the trailing PE of 24.89x, implying expected earnings decline. The biggest downside risk is a delayed agricultural recovery, which could send the stock to the analyst low target of $500, a 26% decline. However, for long-term investors with a 3-5 year horizon, the precision-ag platform and replacement-cycle recovery offer compelling growth potential, with EPS projected to grow significantly by 2028. It is a good buy on pullbacks below $630, where the risk/reward improves.
DE is better suited for long-term investment, with a suggested minimum holding period of 3-5 years. The company is in the early stages of a cyclical recovery, and precision-ag adoption is a multi-year growth driver that should compound earnings through 2028. The beta of 0.911 indicates lower volatility than the market, but the stock has a wide 52-week range of $433-$705.88 and a max drawdown of -20.13%, so short-term trading carries significant risk. The dividend yield of 1.37% is modest but growing, with a sustainable 34.2% payout ratio. Short-term traders could capitalize on momentum, but the thin analyst upside and elevated valuation make long-term holding more attractive for patient investors.
