Deere Earnings Beat, Outlook Disappoints
Deere earnings topped quarterly estimates, but weak guidance and rising production costs cloud margins and investor sentiment for farm-equipment investors.
KEY TAKEAWAYS
- Q4 results beat estimates with $12.4 billion revenue and $1.1 billion net income.
- Fiscal 2026 guidance projects $4.0-$4.8 billion net income, signaling a clear step down.
- Management cited tariffs, higher production costs and weak demand for large agricultural equipment.
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On Nov. 26, 2025, Deere & Company (DE) reported fourth-quarter results that beat estimates, but its fiscal 2026 earnings guidance fell short of last year’s level as management cited tariff pressures, rising production costs, and subdued demand for large agricultural equipment.
Quarterly Results and Margins
Deere said in a press release that fourth-quarter net income was $1.1 billion, or $3.93 a share, compared with $1.2 billion, or $4.55 a share, a year earlier. Revenue rose 11.0% year over year to $12.4 billion, surpassing analyst forecasts.
Farm equipment sales showed mixed results. Production & Precision Agriculture posted $4.7 billion in sales, up 10.0%, but operating profit declined 8.0% to $604 million. Small Agriculture & Turf sales increased 7.0% to $2.5 billion, while operating profit plunged 89.0% to $25 million. Construction & Forestry sales climbed 27.0% to $3.4 billion, with operating profit rising 6.0% to $237 million. Financial Services generated $1.6 billion in revenue, up 2.0%, and net income rose to $293 million from $173 million a year earlier.
Gross profit fell 2.7% to $4.5 billion as cost of sales surged 21.0% to $7.9 billion. At fiscal year-end, Deere held $8.3 billion in cash and equivalents and carried $43.5 billion in long-term borrowings.
Fiscal 2026 Guidance
Deere reported full-year 2025 net income of $5.0 billion, or $18.50 a share, down 29.0% from $7.1 billion, or $25.62 a share, in 2024. The company projects fiscal 2026 net income between $4.0 billion and $4.75 billion.
The guidance anticipates Production & Precision Agriculture sales will decline 5.0% to 10.0% year over year, while Small Agriculture & Turf and Construction & Forestry sales are expected to rise about 10.0% each. Financial Services net income is forecast at $830 million. Deere said it assumes ongoing tariff impacts and higher production costs will persist, even as smaller agriculture and construction segments improve.
This outlook marks a significant step down from the prior year and highlights how cost pressures and weak demand for large agricultural equipment could weigh on margins and revenue mix in 2026.
