Deere Earnings: North American Ag Still Weak but Company Holding Steady and Prepped for 2026

Key Morningstar Metrics for John Deere

• Fair Value Estimate: $550.00
• Morningstar Rating: ★★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Medium

What We Thought of John Deere’s Earnings

Deere DE earnings stayed under pressure in the firm’s fiscal third quarter, with sales down 9% and EPS down 24%. Management tightened 2025 guidance. Despite some moving parts, our net income target is virtually unchanged and closer to the midpoint of the revised guidance.

Why it matters: Ongoing weakness in agriculture markets is not news for most investors, though we acknowledge that Deere’s very strong execution this year has led many to look through the current struggles. Deere’s share price has certainly outshone its peers in recent months.

• Operationally, North American large ag remains the weakest performer. Small ag performance has mainly troughed, and construction and forestry is still down but a relatively small contributor to group results.
• A key takeaway was that production is apparently in line with retail demand, implying that efforts to stabilize inventory levels in the channel have mostly run their course. We believe this likely bodes well for demand in 2026.

The bottom line: We are increasing our fair value estimate for wide-moat Deere to $550 per share from $541, given lower taxes and capital expenditures offsetting some incremental weakness in the precision ag and construction and forestry businesses.

• In our opinion, the segment operating margin numbers in Deere’s revised guidance look too low, and we anticipate these will come in better if they meet the midpoint of the revised guidance.
• We regard Deere as an extremely high-quality company and generally regard weakness in the share price as a buying opportunity despite its relative outperformance compared with its agriculture machinery peers.