DE changes
Pick any two versions below to diff them.
- Price
- $671.65 → $691.75(+3.0%)
- Next earnings is estimate
- Yes → No
- Thesis
- Deere trades at a premium because investors pay for a recovery from what management calls the bottom of the farm equipment cycle and for its lead in precision technology. Fiscal 2026 is a weak year for large farm machines. Deere expects Production & Precision Agriculture sales to fall about 10%, and industry sales of large farm machines in the U.S. and Canada to fall 15% to 20%. Even so, it raised its fiscal 2026 net income guidance to $4.75 billion to $5.00 billion in August 2026, because Small Agriculture & Turf and Construction & Forestry grew. Investors pay for higher earnings when large farm demand returns and for more income from technology on each machine. For the premium to be earned, three things must be true. Large farm machine sales must start to grow in fiscal 2027, as early order programs and lower used-machine inventories suggest. Margins must stay high when tariff costs and production costs rise. Customers must keep buying precision technology, so that earnings at the next peak exceed the diluted EPS of $34.63 in fiscal 2023. The fiscal 2026 report with the fiscal 2027 outlook, removed: expected in late added: on November added: 25, 2026, is the next test. The premium can shrink if low crop prices and weak farm incomes delay the recovery into fiscal 2028.
- Checkpoints
- Nov 25, removed: 2026 (estimate): added: 2026: Fiscal 2026 results and fiscal 2027 outlook. Pending. Watch: Fiscal 2026 net income within the guided $4.75 billion to $5.00 billion and a fiscal 2027 outlook for higher large farm machine sales and net income pass; an outlook for another year of lower large farm sales fails. Feb 2027 (estimate): Q1 fiscal 2027 results: order books. Pending. Watch: Higher Production & Precision Agriculture sales and order books than a year earlier pass; lower sales or a cut in the fiscal 2027 outlook fail.