Deere & Company
DE
$597.24
-0.29%
Deere & Company is the world's leading manufacturer of agricultural equipment and a major producer of construction machinery, operating through segments including Production & Precision Agriculture, Small Agriculture & Turf, Construction & Forestry, and Financial Services. As the dominant player in the agricultural machinery industry with a vast dealer network spanning over 2,000 locations in North America and a presence in over 100 countries, Deere's competitive edge lies in its scale, brand, and precision agriculture technology. The current investor narrative centers on a potential cyclical recovery in the agricultural equipment market, as evidenced by better-than-expected earnings and raised guidance in early 2026, though concerns persist about rising input costs from geopolitical tensions and a weak near-term outlook for large agriculture sales.…
DE
Deere & Company
$597.24
Related headlines
Investment Opinion: Should I buy DE Today?
Rating: Buy. Thesis: Deere's accelerating revenue growth, strong margins, and dominant market position make it a compelling cyclical play, with analyst consensus supporting 8.5% upside to the average target of $648.03.
Supporting Evidence: Q2 2026 revenue grew 6.74% YoY to $13.369B, with net margin improving to 13.26% from 6.83% in Q1. Gross margin rose to 38.17% from 34.66%, and operating margin of 22.48% is well above the 5-year average. Free cash flow TTM is $3.768B, and ROE is 19.37%, reflecting strong returns. The trailing P/E of 24.89x, while above the industry average, is justified by Deere's market leadership and technology investments.
Risks & Conditions: Key risks include a failure of the agricultural cycle recovery, rising input costs from geopolitical tensions, and high debt levels (D/E 2.46x). This Buy rating would be downgraded to Hold if revenue growth decelerates below 5% YoY or if P/E expands above 30x without corresponding earnings growth. Conversely, it could be upgraded if the large agriculture outlook improves and P/E compresses below 20x. Overall, Deere appears fairly valued relative to its history but at a premium to peers, reflecting its quality and cyclical upside.
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DE 12-Month Price Forecast
Deere's improving revenue growth and margins, combined with a supportive analyst consensus, point to a positive 12-month outlook. The base case of gradual recovery to the average target of $648 is most probable (50% probability). However, the weak large agriculture forecast and elevated valuation relative to peers introduce uncertainty, warranting medium confidence. A bullish stance is maintained, but a downgrade to neutral would occur if revenue growth decelerates below 5% or if P/E exceeds 30x without earnings acceleration.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Deere & Company's 12-month outlook, with a consensus price target around $648.03 and implied upside of +8.5% versus the current price.
Average Target
$648.03
0 analysts
Implied Upside
+8.5%
vs. current price
Analyst Count
—
covering this stock
Price Range
$500 - $812
Analyst target range
Deere is covered by 23 analysts, with a consensus recommendation of 'Buy' (mean rating 2.125 on a 1-5 scale, where 1 is Strong Buy). The average price target is $648.03, implying approximately 8.5% upside from the current price of $597.24. The distribution leans bullish, with no 'Sell' ratings in the recent institutional actions, though several firms maintain 'Neutral' stances (Citigroup, JP Morgan, BofA). The target range spans from a low of $500.00 to a high of $812.00, indicating significant dispersion in expectations. The high target of $812 assumes a strong cyclical recovery and successful execution in precision agriculture, while the low target of $500 prices in a prolonged downturn in farm incomes and margin compression. Recent analyst actions show mostly reaffirmations of existing ratings, with Jefferies upgrading from Underperform to Hold in April 2026, suggesting some cautious optimism. The wide spread between low and high targets (62.4% from low to high) reflects high uncertainty around the agricultural cycle and input costs, but the consensus remains positive overall.
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Bulls vs Bears: DE Investment Factors
Deere presents a balanced risk/reward profile. The bull case rests on accelerating revenue growth, strong margins, and analyst optimism (8.5% upside to average target). The bear case highlights elevated valuation (P/E 24.9x vs. industry 15-20x), a weak large agriculture outlook, and high debt (D/E 2.46x). The single most important tension is whether the cyclical recovery in agricultural equipment will materialize strongly enough to justify the premium valuation. Currently, the evidence slightly favors the bulls given the improving revenue trajectory and solid profitability, but the weak large agriculture forecast and macro risks warrant caution.
Bullish
- Revenue Growth Accelerating: Q2 2026 revenue of $13.369B grew 6.74% YoY, accelerating from Q1's 16.3% YoY growth on a smaller base. This indicates strong demand in production and precision agriculture segments, which are the largest contributors to sales.
- Strong Profitability and Margins: Net margin improved to 13.26% in Q2 2026 from 6.83% in Q1, and gross margin rose to 38.17% from 34.66%. Operating margin of 22.48% remains healthy, reflecting pricing power and cost management despite input cost pressures.
- Analyst Consensus Buy with Upside: 23 analysts rate DE a Buy (mean 2.125 on 1-5 scale) with an average target of $648.03, implying 8.5% upside from $597.24. The high target of $812 suggests significant potential if cyclical recovery materializes.
- Market Leadership and Scale: Deere is the world's leading agricultural equipment manufacturer with over 2,000 dealer locations in North America and presence in 100+ countries. Its brand, distribution, and precision agriculture technology provide a durable competitive moat.
Bearish
- Elevated Valuation vs. Peers: Trailing P/E of 24.89x and forward P/E of 26.17x are above the industry average of 15-20x, indicating a premium. The P/S of 2.80x is also above sector median, leaving limited margin of safety if earnings disappoint.
- Weak Large Agriculture Outlook: Despite strong Q2 earnings, Deere issued a weak forecast for its core large agriculture business, citing rising input costs from geopolitical tensions (Iran conflict driving up fertilizer costs). This overshadowed the earnings beat and caused a sharp stock decline.
- High Debt-to-Equity Ratio: Debt-to-equity of 2.46x is elevated, and interest expense of $712M in Q2 2026 (vs. $784M a year ago) remains a significant burden. If interest rates stay high, this could pressure net income and free cash flow.
- Cyclical Sensitivity and Macro Risks: Deere's beta of 0.897 is slightly below market, but its agricultural equipment sales are highly cyclical. A downturn in farm incomes or a recession could sharply reduce demand, as seen in the 52-week low of $433 (27.5% below current price).
DE Technical Analysis
Deere is in a sustained uptrend over the past year, with a 1-year price change of +19.65%, and the current price of $597.24 sits at 72.5% of its 52-week range ($433.00 low to $674.19 high). This positioning near the midpoint of the range suggests the stock has recovered from its lows but is not yet overextended, leaving room for further upside if momentum continues. The stock's beta of 0.897 indicates it is slightly less volatile than the broader market, providing a relatively stable profile for a cyclical industrial. Short-term momentum shows a mixed picture: the 1-month price change is +1.49%, while the 3-month change is +1.15%, both positive but decelerating compared to the 1-year trend. The 1-month relative strength versus SPY is 1.18, indicating slight outperformance, but the 3-month relative strength is -3.52, suggesting recent underperformance. This divergence could signal a temporary pullback within the longer-term uptrend, as the stock has pulled back from its June highs near $635. The 52-week low of $433.00 serves as key support, while the 52-week high of $674.19 is the immediate resistance. A breakout above $674 would signal a resumption of the uptrend and could target new highs, while a breakdown below $433 would indicate a bearish reversal. With a beta of 0.90, Deere's volatility is slightly below the market, meaning it may offer downside protection in a selloff but could lag in a strong rally.
Beta
0.90
0.90x market volatility
Max Drawdown
-20.1%
Largest decline past year
52-Week Range
$433-$674
Price range past year
Annual Return
+19.7%
Cumulative gain past year
| Period | DE Return | S&P 500 |
|---|---|---|
| 1m | +1.5% | -0.5% |
| 3m | +1.1% | +4.9% |
| 6m | +16.1% | +9.7% |
| 1y | +19.7% | +18.4% |
| ytd | +27.9% | +9.0% |
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DE Fundamental Analysis
Deere's revenue trajectory is growing, with Q2 2026 revenue of $13.369 billion, up 6.74% year-over-year from $12.525 billion in Q2 2025. The multi-quarter trend shows revenue growth accelerating from Q1 2026's $9.611 billion (up 16.3% YoY) and Q4 2025's $12.094 billion (up 11.7% YoY), driven by strength in Production & Precision Agriculture ($4.403 billion) and Small Agriculture ($2.339 billion). However, the Construction & Forestry segment faces headwinds, and the weak forecast for large agriculture has tempered enthusiasm. Profitability is solid, with net income of $1.773 billion in Q2 2026 and a net margin of 13.26%, up from 6.83% in Q1 2026. Gross margin improved to 38.17% from 34.66% in Q1, indicating better cost management and pricing power. Operating margin of 22.48% is healthy and above the 5-year average, though it has compressed from the 23.02% in Q2 2025, suggesting some margin pressure from rising input costs. Deere's balance sheet is leveraged but manageable, with a debt-to-equity ratio of 2.46 and a current ratio of 2.31, indicating ample liquidity. Free cash flow TTM is $3.768 billion, and the company generated $874 million in FCF in Q2 2026, though Q1 saw negative FCF of -$1.578 billion due to working capital swings. ROE is 19.37%, reflecting strong returns on equity, but the high debt load (debt-to-equity of 2.46) warrants monitoring, especially if interest rates remain 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
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Valuation Analysis: Is DE Overvalued?
Since Deere has positive net income, the primary valuation metric is the P/E ratio. The trailing P/E is 24.89x, while the forward P/E is 26.17x, implying the market expects earnings to grow modestly. The gap between trailing and forward P/E is small, suggesting limited near-term growth expectations, which aligns with the cautious outlook for large agriculture. Compared to the industry average P/E (not provided, but typically around 15-20x for agricultural machinery), Deere's trailing P/E of 24.89x appears at a premium, likely justified by its market leadership, strong margins, and precision technology investments. The P/S ratio of 2.80x is also above the sector median, reflecting a premium for its scale and brand. Historically, Deere's trailing P/E has ranged from roughly 10x to 55x over the past five years. The current 24.89x is near the middle of that range, suggesting the stock is fairly valued relative to its own history. It is well below the peak of 55x seen in early 2022 and above the trough of 10x in late 2023, indicating a neutral valuation that does not imply extreme optimism or pessimism.
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
Financial & Operational Risks: Deere's high debt-to-equity ratio of 2.46x and interest expense of $712M in Q2 2026 (5.3% of revenue) pose a risk if interest rates remain elevated. Free cash flow TTM is $3.768B, but Q1 2026 saw negative FCF of -$1.578B due to working capital swings, indicating cash flow volatility. Net margin of 13.26% is solid but could compress if input costs (e.g., fertilizer from Iran conflict) continue to rise. Revenue concentration in the cyclical agricultural sector means a downturn could significantly impact earnings.
Market & Competitive Risks: Deere's trailing P/E of 24.89x is at a premium to the industry average of 15-20x, leaving it vulnerable to multiple compression if growth disappoints. The stock's beta of 0.897 suggests moderate market correlation, but a broad market selloff could still pressure the stock. Competitive threats include Caterpillar's entry into autonomous tractors (via Monarch Tractor acquisition), which could erode Deere's technology lead. Regulatory risks from trade policies or environmental regulations on emissions could also impact costs.
Worst-Case Scenario: A prolonged downturn in farm incomes, exacerbated by geopolitical tensions and rising input costs, could cause Deere's revenue to decline sharply. If the stock revisits its 52-week low of $433.00, an investor buying at $597.24 would face a loss of approximately -27.5%. This scenario would likely involve multiple quarters of missed earnings, analyst downgrades, and a P/E compression to the low teens, consistent with the analyst low target of $500 (16.3% downside from current).
FAQ
The key risks are: (1) Cyclical downturn in agriculture – a drop in farm incomes could reduce equipment demand, as seen in the 52-week low of $433 (27.5% below current). (2) High debt – debt-to-equity of 2.46x and interest expense of $712M per quarter could pressure earnings if rates stay high. (3) Input cost inflation – the Iran conflict is driving up fertilizer costs, which could squeeze farmer margins and delay equipment purchases. (4) Competitive threat – Caterpillar's entry into autonomous tractors could challenge Deere's technology lead. The most severe risk is a prolonged agricultural recession, which could cause a 27.5% decline to the 52-week low.
The 12-month forecast is moderately bullish. The base case (50% probability) sees the stock reaching the analyst average target of $648, driven by gradual revenue growth of 5-7% and stable margins. The bull case (25% probability) targets $648-$812, assuming a strong cyclical recovery and P/E expansion to 30x. The bear case (25% probability) sees the stock falling to $433-$500, if a downturn materializes. The most likely scenario is the base case, with the stock trading near $648 within 12 months. Key assumptions include stable farm incomes and no escalation of geopolitical tensions.
DE's trailing P/E of 24.89x is above the industry average of 15-20x, suggesting a premium valuation. However, compared to its own 5-year history (range 10x-55x), the current P/E is near the middle, indicating fair value relative to its own past. The forward P/E of 26.17x implies the market expects modest earnings growth. The P/S of 2.80x is also above the sector median, reflecting Deere's dominant market position and strong margins. Overall, DE is fairly valued to slightly overvalued relative to peers, but the premium is justified by its scale, brand, and technology investments. The market is pricing in a gradual cyclical recovery, not a boom.
DE appears to be a good buy for investors seeking exposure to a cyclical recovery in agriculture, given its market leadership and improving revenue growth (6.74% YoY in Q2 2026). The analyst consensus is Buy with an average target of $648.03, implying 8.5% upside from $597.24. However, the stock trades at a premium P/E of 24.89x vs. industry average of 15-20x, so it is not a deep value play. The biggest downside risk is a prolonged downturn in farm incomes, which could push the stock to $500 (16.3% downside) or the 52-week low of $433 (27.5% downside). For long-term investors with a 3-5 year horizon, DE offers a compelling risk/reward, but short-term traders should be cautious given the weak large agriculture outlook.
DE is better suited for long-term investment (3-5 years) due to its cyclical nature and current position in the agricultural cycle. The stock's beta of 0.897 indicates slightly below-market volatility, but it can experience sharp swings (52-week range $433-$674). Short-term trading is risky given the weak large agriculture outlook and sensitivity to quarterly earnings surprises. For long-term investors, Deere's market leadership, strong margins (net margin 13.26%), and dividend yield of 1.37% provide a solid foundation. A minimum holding period of 3 years is recommended to ride out the agricultural cycle and benefit from precision agriculture growth.
