Deere & Company
DE · NYSE
Next quarter
Consensus is $4.04 EPS for Oct 2026 across 8 estimates, ranging $3.96 to $4.26.
DE Jul 2026
- 6.47%
- $4.79
- $5.10
- —
- $12.61B
Reported results
- $12.61B
- $1.38B
- $5.10
Highlights
- Earnings beat: Q3 FY2026 diluted EPS was $5.10, ahead of the $4.79 consensus by 6.47%; net income rose 7% year over year to $1.379 billion.
- Revenue growth: Worldwide net sales and revenues increased 5% year over year to $12.608 billion, while equipment operations net sales rose 6% to $10.999 billion.
- Guidance raised: Fiscal 2026 net income guidance improved to $4.75 billion-$5.00 billion, and equipment-operations cash-flow guidance increased to $5.0 billion-$5.5 billion.
- Portfolio mix: Small Agriculture & Turf sales increased 12% to $3.383 billion and operating profit rose 28% to $622 million; Construction & Forestry sales grew 18% to $3.618 billion and operating profit jumped 84% to $436 million.
- Agriculture trough: Production & Precision Agriculture sales fell 6% to $3.998 billion and operating profit declined 9% to $527 million, with Deere now expecting full-year segment sales down approximately 10% and a 2026 cycle bottom.
- Construction visibility: Construction & Forestry orders extend well into FY2027, supported by infrastructure, data-center and energy projects; factory-installed SmartGrade adoption rose more than 50% year to date and job-site safety solution sales increased nearly 40%.
- Early-order signals: North American planter and sprayer early-order programs were running mid-single digits above the comparable point last year, while See & Spray adoption is expected to nearly double to about one-third of sprayers ordered.
- Tariff timing: Deere recognized $110 million of tariff refunds in the quarter and $382 million year to date; it expects approximately $1.1 billion of direct tariff expense for FY2026 and no further refunds in the fourth quarter.
Analysis
Deere's Q3 FY2026 was a better-than-expected earnings quarter in a still uneven equipment market. Diluted EPS of $5.10 exceeded the $4.79 consensus by 6.47%, while net income increased 7% year over year to $1.379 billion and revenue rose 5% to $12.608 billion. Compared with Q2 FY2026, revenue increased from $9.61 billion and net income more than doubled from $656 million, reflecting Deere's seasonal earnings pattern. Against Q3 FY2025, EPS increased from $4.75 and revenue from $12.018 billion. Nine-month net income, however, remained down 4% to $3.808 billion.
The print was defined by disciplined execution, strong results outside large agriculture and favorable tariff timing. Small Agriculture & Turf and Construction & Forestry more than offset weakness in Production & Precision Agriculture, where sales declined 6% and operating profit fell 9% amid softer South American and European demand. Deere raised full-year net income guidance to $4.75 billion-$5.00 billion and equipment-operations cash-flow guidance to $5.0 billion-$5.5 billion. Management also framed 2026 as the bottom of the agricultural equipment cycle, citing healthier used-equipment inventories, mid-single-digit early-order growth and rising precision-technology adoption, while cautioning that any recovery in 2027 should be measured.
Earnings and guidance
Deere delivered a stronger quarter through production execution, cost discipline, pricing and tariff-related benefits. Equipment operations generated a 14.4% operating margin, while consolidated operating profit rose 18% year over year to $1.856 billion. The company raised fiscal 2026 net income guidance to $4.75 billion-$5.00 billion and equipment-operations operating cash-flow guidance to $5.0 billion-$5.5 billion. The outlook assumes a 24%-26% effective tax rate and no additional tariff refunds during the fourth quarter.
Construction and Forestry
Construction & Forestry was the largest contributor to the quarter's operating improvement. Sales rose 18% to $3.618 billion and operating profit increased 84% to $436 million, lifting operating margin to 12.1% from 7.7%. Higher shipment volumes and favorable price realization drove the gain, partly offset by higher selling, administrative and general and R&D costs. Price realization was approximately 8 percentage points, helped by lapping prior-year retail incentives. Deere maintained its full-year sales outlook of approximately 20% growth and narrowed its margin outlook to 10.5%-11.5%.
- Demand visibility: Customer backlogs extend well into FY2027, with infrastructure, data-center, energy and roadbuilding projects supporting demand; U.S. and Canadian construction equipment industry sales are now expected to rise 5%-10% in FY2026.
- Rental channel: Roughly 30%-35% of earthmoving transactions now begin as rentals, and dealer-owned rental fleets and independent rental demand are expanding.
- Technology adoption: Factory-installed SmartGrade adoption increased more than 50% year to date, while job-site safety solution sales rose nearly 40% year over year.
Agricultural cycle bottom
Deere continued to characterize FY2026 as the bottom of the current agricultural equipment cycle, but management expects recovery to be gradual rather than sharp. Early-order programs for North American planters and sprayers were tracking mid-single digits above the comparable point last year, with planters and sprayers already ahead of the prior year's completed program. Healthier dealer inventories, lower late-model used-equipment inventories and a normalized new-versus-used price spread are improving the setup for replacement demand.
Production and Precision Ag
Production & Precision Agriculture remained the key weak spot. Sales declined 6% to $3.998 billion and operating profit fell 9% to $527 million, reducing operating margin to 13.2% from 13.6%. Lower shipment volumes and mix and higher production costs outweighed favorable price realization and currency. Deere now expects full-year segment sales to decline approximately 10% and operating margin to be 11%-12%, reflecting softer conditions in South America and Europe. The U.S. and Canada remained stable, albeit at low demand levels, while the company is modestly underproducing retail demand to protect channel health.
Small Ag and tariffs
Small Agriculture & Turf provided another source of resilience. Sales rose 12% to $3.383 billion and operating profit increased 28% to $622 million, taking margin to 18.4% from 16.0%. Higher shipment volumes, mix and price realization more than offset higher production costs. Deere maintained its full-year sales outlook of approximately 15% growth and raised and narrowed its margin outlook to 14.5%-15.5%. Financial Services net income increased 7% to $219 million, helped by financing spreads despite a lower average portfolio.
- Tariff refunds: Deere recognized $110 million of refunds in Q3, bringing fiscal-year refunds to $382 million and providing a material benefit to quarterly profitability.
- Forward tariff burden: Direct tariff expense is expected to be approximately $1.1 billion in FY2026, excluding refunds; with no further refunds assumed, the net FY2026 exposure is about $718 million.
- Precision agriculture: See & Spray delivers more than 50% herbicide savings, is expected to be included on about one-third of North American sprayers ordered, and Deere's Operations Center now covers more than 520 million engaged acres across nearly 1.2 million connected machines.
