DE — Deere & Company

As of 2026-08-27, market sentiment is cautiously constructive but not euphoric. Deere beat Q3 EPS estimates ($5.10 vs. $4.70 consensus), raised full-year FY2026 guidance to $4.75–5.00B, and analysts lifted targets (UBS $732, Oppenheimer $685, DA Davidson $685). However, the stock fell on the day, the consensus rating is closer to Hold/Moderate Buy with 21 Holds vs. 19 Buys, and large-ag demand remains weak, so the mood is more 'hoping for the trough' than 'confident recovery.'

The last 12 quarters show a clear cyclical downcycle followed by an early inflection. Revenue and EPS peaked around fiscal 2023/2024, slid through fiscal 2025, and stabilized in fiscal 2026. Q3 FY2026 revenue of $12.608B was up ~7% YoY from $11.783B, operating margin improved to 20.6% from 18.3%, and diluted EPS rose to $5.10 from $4.75. But TTM net income is still below the prior-year period ($4.87B vs. $5.21B), so this is a trough inflection, not yet a confirmed structural upturn.

Expensive. As of 2026-08-27, DE trades at 34.5x TTM EPS of $18.06 and roughly 34x next-FY consensus EPS of $18.10, versus Deere's 5-year average P/E of 17.4x. Price-to-sales is 3.53x versus the 5-year average of 2.36x, and the dividend yield is only 1.02%. Even accounting for cyclical trough earnings, the market is paying a premium for a recovery that is not yet visible in forward estimates.

The stock is pricing in a robust cyclical recovery, not current fundamentals. At $622.66 as of 2026-08-27, the forward P/E on consensus EPS of $18.10 is roughly 34x, which implies the market is already underwriting a rebound toward $30+ normalized EPS at a more normal ~20x multiple. The playbook is to wait for confirmation from early order programs, used-equipment inventories, and FY2027 guidance before paying that multiple. If earnings recover as hoped, the P/E will compress naturally; if not, the stock has meaningful downside from multiple de-rating.

As of 2026-08-27, RSI was 52.58, which is neutral. Price was 1.2% above the 20-day SMA, 2.1% above the 50-day SMA, and 10.75% above the 200-day SMA. That is an uptrend with no overbought or oversold signal, so there is no clear technical entry edge here—just a stock that has recovered strongly from the low $400s and is now resting below its 52-week high of $674.19.

• Soft crop commodity prices and squeezed farm incomes are suppressing large-ag equipment demand; industry large-tractor and combine unit sales are projected down 15–20% in 2026.
• Elevated interest rates raise the cost of capital-intensive equipment purchases, though Deere Financial credit quality has remained manageable so far.
• US infrastructure spending and AI/data-center construction are driving Construction & Forestry growth, with that segment up 18% in Q3 FY2026.
• Tariffs are a net headwind: Deere expects roughly $1.1B of direct tariff expense in FY2026, partially offset by $382M of year-to-date refunds.
• Precision technology (See & Spray, autonomy, smart-farm software) is a structural margin driver but adds R&D cost during the downturn.

• Q4 and full-year FY2026 earnings, expected in late November/early December 2026, including the first FY2027 outlook—key confirmation of whether the ag cycle is genuinely bottoming.
• Early order program trends and used-equipment inventory health heading into late 2026 as leading indicators for large-ag demand recovery.
• Continued AI/data-center and infrastructure strength lifting Construction & Forestry sales.
• Tariff policy changes or additional refunds, which could reduce the ~$1.1B FY2026 tariff headwind.

• Large-ag demand keeps deteriorating if crop prices stay depressed and farm incomes remain under pressure.
• Valuation risk: at 34.5x trailing earnings, any pause in the recovery narrative could trigger meaningful multiple compression.
• Credit losses in Deere Financial if higher-for-longer rates stress farmer balance sheets; financial services contributed $219M in Q3 but is cyclical.
• Tariff escalation or competitive discounting that pressures Deere's pricing power and equipment margins.

As of 2026-08-27, I would not be a buyer at $622.66. Deere is a high-quality, well-run cyclical in the early innings of an inflection, but the stock already trades at 34.5x trailing earnings with roughly flat forward EPS, leaving no margin of safety. The risk/reward is unattractive until either earnings catch up to the multiple or the price resets.

I used FY2024 actual diluted EPS of $25.60 as a reasonable mid-cycle earnings proxy, then applied a 19x through-cycle P/E—a modest premium to Deere's 5-year average of 17.4x given its ROE, cash conversion, and non-ag growth offsets. That yields approximately $486, which is well below the current $622.66 price and implies the market is already pricing in a robust recovery that the reported numbers do not yet support.