Deere & Company
DE
$641.86
-1.35%
Deere & Company is the world's leading manufacturer of agricultural machinery and a major producer of construction and forestry equipment, 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 — with roughly 60% of sales in the US/Canada and a dealer network spanning over 100 countries. Its competitive identity rests on an unrivaled dealer moat, premium brand pricing power, and an increasingly software- and precision-ag-enabled product stack that positions it as the technology platform for modern farming rather than a pure cyclical equipment maker. The current investor narrative centers on whether the agricultural equipment cycle has bottomed: management's raised guidance and better-than-expected results have driven the stock to all-time highs, with analysts framing fiscal 2028 EPS growth as the key long-term catalyst, while bears point to soft large-ag demand, elevated fertilizer and input costs tied to Middle East tensions, and competitive threats such as Caterpillar's acquisition of Monarch Tractor in autonomous farming. The debate has shifted from 'is the trough here?' to 'how durable is the recovery and how much precision-ag pricing power can offset volume softness in PPA.'…
DE
Deere & Company
$641.86
Related headlines
Investment Opinion: Should I buy DE Today?
Rating: Hold (accumulate on weakness). The core thesis is that Deere's ag cycle has genuinely bottomed — four quarters of positive revenue growth and margin recovery from 32.57% to 37.03% gross — but the stock's 40.40% one-year gain has already priced much of that recovery, leaving only +8.1% upside to the $694.01 average analyst target against -22.1% downside to the $500 low target. The 'buy' consensus (1.92 mean rating across 23 analysts) supports the direction, but the risk/reward at $641.86 is roughly 1:2.7, which argues for patience rather than chasing.
Supporting evidence is solid: revenue grew 7.0% YoY in Q3 FY2026 with Q1 up 16.3%; gross margin expanded 446 basis points from the Q4 FY2025 trough; net margin reached 10.94% versus 8.81% a year prior; ROE of 19.37% is strong; TTM free cash flow of $3.867 billion covers the 34.2% dividend payout comfortably at a 1.37% yield; and the $9.15 billion cash balance funds growth internally. The 2.80x PS and 4.86x EV/Sales are premium multiples, but the 36.48% gross margin and dealer moat provide partial justification — the question is whether 15.51x EV/EBITDA leaves room for further multiple expansion.
The biggest risks that could invalidate the thesis are: (1) large-ag demand failing to recover, keeping PPA volumes soft and margins below the 14–16% peak; (2) fertilizer cost inflation from Middle East tensions squeezing farmer capex; and (3) Caterpillar's autonomous tractor push eroding precision-ag differentiation. This Hold would upgrade to Buy if the stock pulls back toward the $580–$600 support zone (implying ~22x trailing PE) or if FY2027 guidance confirms EPS tracking toward the $27.13 consensus; it would downgrade to Sell if revenue growth decelerates below 5% or gross margin falls back below 35%. Verdict: fairly valued to modestly overvalued relative to history, with the premium justified only if the FY2028 EPS growth materializes.
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DE 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Deere & Company's 12-month outlook, with a consensus price target around $694.01 and implied upside of +8.1% versus the current price.
Average Target
$694.01
0 analysts
Implied Upside
+8.1%
vs. current price
Analyst Count
—
covering this stock
Price Range
$500 - $813
Analyst target range
Coverage is robust with 23 analysts, and sentiment is decisively bullish: the consensus recommendation is 'buy' with a mean rating of 1.92 (where 1.0 is a strong buy), and the average target price of $694.01 implies +8.1% upside from the current $641.86. The consensus leans bullish, supported by a wave of recent upgrades — Evercore ISI to Outperform from In Line (September 3), Baird to Outperform from Neutral (August 31), and reiterations of Buy/Outperform from Truist, RBC, DA Davidson, Barclays, Oppenheimer, and Raymond James through late August — while Citigroup and JP Morgan remain Neutral, reflecting lingering caution on the ag cycle. The target range is wide, from a low of $500 (-22.1% downside) to a high of $813.18 (+26.7% upside), a spread of over 60% of the current price that signals meaningful disagreement about the durability of the recovery. The high target assumes multiple expansion on accelerating precision-ag adoption and a full large-ag rebound toward the FY2028 EPS growth analysts have highlighted; the low target of $500 prices in margin compression from elevated fertilizer and input costs, soft PPA volumes, and competitive pressure from Caterpillar's autonomous tractor push. The wide dispersion, combined with the stock's recent 4.1% one-month decline despite bullish ratings, suggests analysts are chasing price rather than leading it — conviction is high on direction but low on magnitude, warranting position sizing that respects the 20%+ drawdown risk embedded in this cyclical.
Bulls vs Bears: DE Investment Factors
The bull case rests on tangible evidence: four consecutive quarters of positive revenue growth, gross margin recovery from 32.57% to 37.03%, a 19.37% ROE, and a 'buy' consensus with $694 average targets. The bear case is primarily valuation-driven: 24.89x trailing and 28.18x forward PE sit well above the 11–15x historical earnings-peak multiples, and the forward-above-trailing inversion signals the market expects EPS normalization rather than growth. Currently the bull evidence is stronger on fundamentals — the cycle has demonstrably turned — but the bear case is stronger on price, with the stock up 40.40% in a year on only 7% revenue growth, meaning multiple expansion has done most of the work. The single most important tension is whether precision-ag pricing power and the FY2028 EPS growth story can sustain a 25x+ multiple, or whether the stock mean-reverts toward its historical 15x band as the recovery matures. The recent one-month underperformance (-4.12% vs. SPY +1.22%) suggests the market is beginning to test that question.
Bullish
- Revenue re-accelerating across four quarters: Q3 FY2026 revenue of $12.608 billion grew 7.0% YoY, following +16.3% in Q1, +6.7% in Q2, and +11.7% in Q4 FY2025 — a consistent positive trajectory that supports the consensus $48.61 billion FY estimate and suggests the ag cycle trough is behind the company.
- Margin recovery from FY2025 trough: Gross margin expanded from 32.57% in Q4 FY2025 to 37.03% in Q3 FY2026, and net margin rose from 8.81% to 10.94%, with Q2 FY2026 hitting 38.17% gross and 13.26% net. This operating leverage on recovering volumes is the core earnings driver behind the FY2028 EPS growth narrative.
- Strong analyst conviction and upgrades: 23 analysts carry a 'buy' consensus with a 1.92 mean rating and a $694.01 average target (+8.1% upside), backed by recent upgrades from Evercore ISI and Baird in late August/early September. The $813.18 high target implies +26.7% upside if precision-ag adoption accelerates.
- Defensive beta with market-beating momentum: Beta of 0.872 makes Deere ~13% less volatile than the market, yet the stock is up 40.40% over one year versus SPY's 15.53% — a +24.87% relative strength reading. This combination of quality/defensive characteristics with growth-like returns is unusual for an industrial cyclical.
Bearish
- Forward PE exceeds trailing PE: At 28.18x forward versus 24.89x trailing, the market is pricing an EPS decline from the current run-rate — an unusual inversion for a stock at all-time highs. The consensus FY EPS estimate of $27.13 versus the $5.11 quarterly run-rate implies the market expects normalization, not acceleration.
- Valuation rich versus historical and peers: The 24.89x trailing PE sits well above the 11–15x levels seen during the FY2023–FY2024 earnings peak, and 15.51x EV/EBITDA is rich for a cyclical industrial. The 4.82x PB is near the top of its 4.5–6.5x historical range, leaving limited margin of safety if large-ag demand disappoints.
- Momentum divergence and distribution signals: The stock is down 4.12% over the past month versus SPY's +1.22% (relative strength -5.34%), including a -9.6% slide from $687 to $620.93 in five October sessions. This one-month underperformance against a rising market is a classic distribution pattern after the August–September parabolic run from $580 to $709.
- Input cost and geopolitical pressure: Deere has explicitly flagged that the Iran conflict is driving up fertilizer costs, which pressures farmer incomes and large-ag equipment demand. The May 21 earnings beat was overshadowed by a weak large-ag forecast and rising input costs, triggering a sharp stock decline.
DE Technical Analysis
Deere is in a sustained, powerful uptrend, with the stock up 40.40% over the past year and 37.50% year-to-date, dramatically outpacing the S&P 500's 15.53% and 11.93% respective gains (relative strength of +24.87% and +25.57%). At $641.86, the stock sits at roughly 70.3% of its 52-week range of $454.50–$721.22, having pulled back from the September all-time high near $709 but still holding well above the midpoint — a positioning that signals intact momentum with some near-term overextension being worked off rather than a broken trend. The 20.13% max drawdown over the period underscores that this is a high-conviction trend with sharp shakeouts, not a smooth ride. Recent momentum has decelerated sharply: the stock is down 4.12% over the past month versus a +1.22% gain for SPY, producing a relative strength reading of -5.34%, while the 3-month change of +7.47% still beats SPY's +2.69% (+4.78% relative). This one-month underperformance against a rising market is a classic momentum divergence — the October slide from $687 on October 2 to $620.93 on October 9 (-9.6% in five sessions) followed by a bounce to $650 and a fade back to $641.86 suggests distribution and mean reversion after the August–September parabolic run from $580 to $709, rather than a trend reversal, given the 6-month gain of +8.71% remains positive. Key resistance sits at the 52-week high of $721.22, roughly 12.4% above the current price; a breakout above that level would confirm the cyclical recovery thesis and likely trigger momentum-chasing flows, while support rests at the 52-week low of $454.50 (29.2% below current levels) with intermediate support around the $600–$620 zone that held during the October pullback. With a beta of 0.872, Deere is roughly 13% less volatile than the market, which is unusually defensive for an industrial cyclical and reflects the stock's quality/defensive bid — this argues for larger position sizing tolerance but also means the 40% one-year move was driven by fundamental re-rating rather than leverage to market beta.
Beta
0.87
0.87x market volatility
Max Drawdown
-20.1%
Largest decline past year
52-Week Range
$455-$721
Price range past year
Annual Return
+40.4%
Cumulative gain past year
| Period | DE Return | S&P 500 |
|---|---|---|
| 1m | -4.1% | +0.2% |
| 3m | +7.5% | +2.9% |
| 6m | +8.7% | +8.4% |
| 1y | +40.4% | +14.9% |
| ytd | +37.5% | +11.9% |
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DE Fundamental Analysis
Revenue is re-accelerating: Q3 FY2026 (quarter ended August 2, 2026) revenue came in at $12.608 billion, up 7.0% year-over-year versus $11.783 billion in Q3 FY2025, and the multi-quarter trend shows clear improvement — Q1 FY2026 revenue of $9.611 billion (+16.3% vs. Q1 FY2025's $8.262 billion), Q2 FY2026 of $13.369 billion (+6.7% vs. $12.525 billion), and Q4 FY2025 of $12.094 billion (+11.7% vs. $10.827 billion). Segment data shows the mix: PPA at $3.919 billion, Small Agriculture at $2.425 billion, Compact Construction at $2.128 billion, Financial Products at $1.49 billion, Roadbuilding at $1.146 billion, Turf at $875 million, and Forestry at $283 million — with the construction and roadbuilding lines providing diversification against soft large-ag demand. The trajectory implies the ag cycle trough is behind the company, supporting the consensus revenue estimate of $48.61 billion, though the 7% growth rate is modest relative to the stock's 40% one-year move, meaning multiple expansion — not just earnings — is doing much of the work. Profitability is solid and improving: Q3 FY2026 net income was $1.379 billion on a 10.94% net margin, with gross margin of 37.03% and operating margin of 20.56%, and the quarterly progression shows margin recovery from Q1's 34.66% gross margin and 6.83% net margin to Q2's 38.17% gross and 13.26% net. Trailing gross margin of 36.48% and operating margin of 18.84% compare favorably to the FY2025 trough (Q4 FY2025 gross margin 32.57%, net margin 8.81%), confirming margin expansion as volumes recover and pricing holds; the 11.25% net margin is healthy for capital-intensive machinery but below the 14–16% peaks seen in FY2023–FY2024, leaving room for cyclical upside. Balance sheet and cash flow present a mixed picture: debt-to-equity of 2.46x is elevated but typical for a captive-finance industrial, the current ratio of 2.31x signals ample liquidity, and TTM free cash flow of $3.867 billion against a $125.1 billion market cap implies a modest FCF yield of roughly 3.1%. ROE of 19.37% is strong, but ROA of just 3.76% reflects the finance-arm asset base; quarterly FCF has been volatile ($1.943 billion in Q3 FY2026, $874 million in Q2, -$1.578 billion in Q1 due to working capital), and the dividend payout ratio of 34.2% with a 1.37% yield is comfortably covered, while the $9.15 billion cash balance provides ample cushion for internal funding of growth and buybacks.
Quarterly Revenue
$12.6B
2026-08
Revenue YoY Growth
+7.0%
YoY Comparison
Gross Margin
37.0%
Latest Quarter
Free Cash Flow
$3.9B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is DE Overvalued?
Because Deere is solidly profitable (Q3 FY2026 net income of $1.379 billion), the PE ratio is the appropriate primary metric: the stock trades at 24.89x trailing earnings versus 28.18x forward earnings, an unusual inversion where the forward multiple exceeds the trailing multiple — implying the market expects EPS to decline from the current run-rate, consistent with the reported EPS of $0.04 in the key metrics dataset (which appears distorted relative to the $5.11 quarterly EPS in the income statement) and the consensus FY estimate of $27.13. The gap between trailing and forward PE signals that the market is pricing a normalization of earnings rather than growth acceleration, a cautious stance for a stock at all-time highs. Against the sector, Deere's 24.89x trailing PE and 2.80x PS sit at a premium to typical agricultural machinery peers, which historically trade in the mid-teens to low-20s; the 4.86x EV/Sales and 15.51x EV/EBITDA are rich for a cyclical industrial, though the 36.48% gross margin and 19.37% ROE provide partial justification. The premium reflects Deere's precision-ag technology narrative and dealer moat, but at 15.5x EBITDA the market is already paying for a recovery, leaving limited margin of safety if large-ag demand disappoints. Historically, Deere's PE has ranged from roughly 9.9x (Q2 FY2023) to 54.8x (Q1 FY2026, a seasonally weak quarter), with the current 24.89x sitting in the upper-middle of that band and well above the 11–15x levels seen during the FY2023–FY2024 earnings peak — meaning the market is pricing optimistic recovery expectations rather than trough multiples. The PB ratio of 4.82x is near the high end of its historical 4.5–6.5x range, and the negative PEG ratio of -0.89 (reflecting distorted near-term EPS growth) underscores that valuation support depends entirely on the FY2027–FY2028 earnings recovery materializing.
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 and operational risks center on the elevated debt load and the capital intensity of the captive finance arm. Debt-to-equity of 2.46x is high in absolute terms, though typical for a captive-finance industrial, and ROA of just 3.76% reflects the large finance-arm asset base dragging on returns. Quarterly free cash flow is volatile — $1.943 billion in Q3 FY2026, $874 million in Q2, and -$1.578 billion in Q1 due to working capital swings — meaning the $3.867 billion TTM FCF (a modest 3.1% yield on the $125.1 billion market cap) could compress if dealer inventories build. Revenue concentration in PPA ($3.919 billion of the quarter) ties the company's fortunes to large-ag demand, which management itself flagged as weak in the May forecast, and the 10.94% net margin remains below the 14–16% peaks of FY2023–FY2024, leaving earnings vulnerable to any volume disappointment.
Market and competitive risks are dominated by valuation compression. At 24.89x trailing PE and 15.51x EV/EBITDA, Deere trades at a premium to agricultural machinery peers that historically command mid-teens to low-20s multiples; a re-rating toward 18x on the $27.13 consensus EPS would imply roughly $488 per share, near the analyst low target of $500. Beta of 0.872 provides some macro insulation, but the stock is not immune to sector rotation — the July 29 hawkish-Fed and Middle East tension selloff hit cyclicals broadly. Competitive disruption is a live threat: Caterpillar's Monarch Tractor acquisition targets autonomous farming, directly challenging the precision-ag narrative that justifies Deere's premium, while elevated fertilizer costs tied to the Iran conflict squeeze farmer budgets and delay large-equipment purchases.
Worst-case scenario: a renewed large-ag downturn combines with fertilizer cost inflation and a competitive share loss in precision ag, causing FY2027 EPS to undershoot the $27.13 consensus toward the $21.97 low estimate. Applying a compressed 20x multiple to that lower EPS yields roughly $439, below the 52-week low of $454.50 — implying a decline of approximately -29% from the current $641.86 to the 52-week low, and up to -35% in a severe de-rating. The 20.13% max drawdown already experienced over the past 180 days demonstrates that sharp shakeouts are a feature of this stock, not an anomaly, and the $500 analyst low target (-22.1%) represents a realistic intermediate downside if the recovery stalls.
FAQ
Ranked by severity: (1) Valuation compression — 24.89x trailing PE versus a historical 11–15x earnings-peak band means a de-rating alone could take the stock to the $500 analyst low target, a -22.1% move. (2) Large-ag demand risk — PPA at $3.919 billion remains the profit engine, and management flagged weak large-ag demand in May; a stalled recovery would pressure the 10.94% net margin. (3) Input cost inflation — the Iran conflict is driving up fertilizer costs, squeezing farmer budgets and delaying equipment purchases. (4) Competitive disruption — Caterpillar's Monarch Tractor acquisition directly challenges Deere's precision-ag differentiation, the very narrative justifying its premium multiple.
The base case (55% probability) targets $660–$720, aligned with the $694.01 average analyst target, assuming revenue growth holds at 5–8% and margins stabilize. The bull case (20% probability) targets $760–$813, requiring FY2027 guidance above the $27.13 consensus and multiple expansion toward 28x forward earnings. The bear case (25% probability) targets $454–$500, aligned with the analyst low target and 52-week low, if large-ag demand stalls and EPS falls toward the $21.97 low estimate. The base case is most likely, with the key assumption being that gross margin holds above 36% and FY2027 EPS tracks toward consensus.
DE appears modestly overvalued relative to its own history. At 24.89x trailing and 28.18x forward PE, the stock sits well above the 11–15x band seen during the FY2023–FY2024 earnings peak, and the 4.82x PB is near the top of its 4.5–6.5x historical range. The 15.51x EV/EBITDA and 4.86x EV/Sales are rich for a cyclical industrial, though the 36.48% gross margin and dealer moat provide partial justification. The unusual forward-above-trailing PE inversion implies the market expects EPS to decline from the current run-rate, a cautious signal. The market is paying a premium for the precision-ag technology narrative — if that narrative holds, the multiple is defensible; if it cracks, reversion toward 18x on $27.13 EPS implies roughly $488.
From a risk/reward perspective, DE is a reasonable but not compelling buy at $641.86. The +8.1% upside to the $694.01 average analyst target compares unfavorably to the -22.1% downside to the $500 low target, a roughly 1:2.7 ratio. The fundamentals support the direction — 7.0% revenue growth, 37.03% gross margin, 19.37% ROE — but the 24.89x trailing PE already prices in much of the recovery. It is a better buy on a pullback toward the $580–$600 support zone, or for long-term investors comfortable with a 20%+ drawdown risk (the stock experienced a 20.13% max drawdown in the past 180 days) who believe the FY2028 EPS growth story.
DE is better suited to long-term holding with a minimum suggested horizon of 18–24 months, spanning the FY2027–FY2028 EPS growth cycle that analysts have identified as the key catalyst. The 0.872 beta and 1.37% dividend yield with a comfortable 34.2% payout ratio support a buy-and-hold approach, while the 20.13% max drawdown and sharp October shakeout (-9.6% in five sessions) make short-term trading risky without tight stops. Earnings visibility is moderate — the ag cycle is recovering but fertilizer costs and competitive threats add uncertainty. Short-term traders could play the $600–$620 support to $721 resistance range, but the risk/reward favors patient accumulation on weakness over momentum chasing at current levels.