Deere & DE
Industrials · Agricultural - Machinery · Synthos Deep Dive · 2026-08-04
The Overview
Deere makes tractors, combine harvesters, construction diggers and road-building machines, and it also runs a bank that lends farmers the money to buy them. About four-fifths of the business is farm equipment and construction equipment; the rest is the lending.
Farming has had two bad years. When crop prices fall, farmers stop buying new tractors, and Deere's sales fell from $60 billion in 2023 to $45 billion in 2025 — a quarter of the business gone in two years — with profit falling by half. Deere itself expects the market for its biggest, most expensive tractors and combines in North America to fall another 15 to 20% this year.
Some parts are recovering. Construction equipment sales rose 29% last quarter and small farm equipment rose 16%. But the biggest and most profitable division — the large tractors and precision-farming technology — fell 14%, and its profit fell 39%.
Two things about the data are worth knowing before looking at any screen.
First, when analysts publish a revenue forecast for Deere, they are forecasting only the machinery sales. When the company reports "revenue," it includes the lending business too. These are different numbers by about $6 billion a year, and comparing one to the other makes it look as though sales are falling when the machinery business is actually expected to grow about 9%.
Second, Deere looks heavily indebted — around $56 billion net — and it is not, in the way that number implies. Almost all of that debt belongs to the finance arm and is matched against $64 billion of loans to farmers. The actual machinery company owes about $3 billion net. That is the difference between a fragile balance sheet and a very solid one.
The shares are $617.14. The company has told investors it expects to earn $4.5 to $5.0 billion this year, which works out to $16.64 to $18.48 per share. Analysts are forecasting $18.09 — above the middle of the company's own range. At $617 you are paying about 34 times those earnings. Our estimate of fair value is $640, about 4% higher. The average analyst says $691, but the analyst community as a whole rates it a Hold, with six firms outright telling clients to sell.
The company reports again on 20 August, sixteen days away.
- Downside Risk 6/10. The machinery balance sheet is excellent. The multiple is high and the biggest market is still shrinking.
- Growth Quality 5/10. Two segments growing strongly, the largest one falling hard. Revenue recovering, earnings not yet.
- Exponential Potential 5/10. The precision-farming technology is genuinely valuable and genuinely non-linear — but it sells more content per tractor, not more tractors.
Putting a number on it: our fair-value estimate is $640 against a current price of $630.33 — real upside if our numbers are right.
Our summary metrics
"Rated 6 — a franchise with almost no balance-sheet risk once the finance company is separated, attached to a cyclical earnings stream at a 34x multiple with the company's own outlook calling for its largest market to fall further. The supports, and they are stronger than any screen shows: Equipment Operations net debt at 2026-05-03 is $3,165M (borrowings $9,255M less cash and marketable securities of $6,090M) against Equipment Operations total assets of $44,397M and adjusted equity of $20,585M; Financial Services carries $54,567M of borrowings against $64,428M of financing receivables, securitised receivables, operating-lease equipment and trade receivables, which is a matched book at roughly 8.0x equity — normal for a captive lender; beta is 0.897, the second lowest in this batch; the dividend is covered; and the company has beaten consensus EPS in each of the last five quarters, by 19.4%, 3.9%, 2.3%, 19.8% and 14.9%. Against that: revenue is 25.9% below the fiscal-2023 peak and net income 50.6% below it; the company's OWN fiscal-2026 industry outlook has US and Canada Large Ag down 15 to 20% and South American tractors and combines down about 15%; US revenue fell from $30,242M to $23,974M in fiscal 2025, a 20.7% decline, while international was roughly flat, so the downcycle is concentrated in the largest market; the shares trade at 34.1x the fiscal-2026 consensus, which itself sits above the midpoint of management's $4.5-5.0B net-income guidance; and the sell-side consensus is Hold with six outright sell ratings and a low target of $500, 19.0% below spot. Not a 5, because 34x trough earnings on a business whose principal market is still contracting has no cushion. Not a 7, because there is no solvency question anywhere in this file."
"Rated 5 — genuinely mixed, and the mix is the story. What is growing: Construction and Forestry net sales of $3,790M in the April quarter, up 29%, with operating profit up 48% to $561M and margin from 12.9% to 14.8%; Small Ag and Turf net sales of $3,485M, up 16%, with profit up 25% and margin from 19.2% to 20.6%; Financial Services operating profit up 21%. Management's own fiscal-2026 segment outlook has Construction and Forestry up about 20% and Small Ag and Turf up about 15%. What is shrinking: Production and Precision Ag — the largest segment at $16,960M of fiscal-2025 net sales — fell 14% in the quarter with operating profit down 39% and margin from 22.0% to 15.7%, and management guides it down 5 to 10% for the full year. Consolidated: total net sales and revenues up 5% in the quarter and 8% in the half, but net income DOWN 2% and 9% respectively. Consensus equipment net sales of $41,640M for fiscal 2026 against $38,286M in fiscal 2025 is +8.8%, and $44,767M for fiscal 2027 is a further +7.5% — but consensus EPS for fiscal 2026 of $18.089 is essentially flat against the roughly $18.51 delivered in fiscal 2025. Revenue recovering while earnings do not is the definition of a mid-downcycle profile, and a 5 says exactly that: not deteriorating, not yet inflecting."
"Rated 5 — a real technology slope attached to a machinery replacement cycle, and the knowledge base's best material is precisely about the slope. The business_breakdowns lane (2023-05-18) argues that Deere's integrated guidance, telematics and data layer creates 'Apple-like switching costs and network effects' (conviction 85); that See-and-Spray — spraying only where a camera detects a target — can cut farmer chemical cost 50 to 70% (conviction 70); that by opening its data platform to startups and incumbents on an App Store model Deere makes the industry spend to improve its own platform while owning the top software layers (conviction 75); and that the connected installed base is the deployment surface for computer vision toward full farm autonomy (conviction 65). Deere's own disclosure supports the direction: Production and Precision Ag is named for the technology, and research and development ran $2,311M in fiscal 2025 — 5.2% of revenue and UP 0.9% in a year revenue fell 11.6%, which is the correct behaviour and is why the trough margin is what it is. The ceiling is arithmetic. Precision agriculture sells more content per machine; it does not sell more machines, and the number of machines is set by farm income, which is set by crop prices and government payments. The one 2026-dated claim in the lane (odd_lots, conviction 55) makes exactly that point from the other direction: government bridge payments 'pass straight through the farmer P&L to land, equipment and input companies like John Deere.' A 5: genuine software optionality inside a machine that only sells when the farmer has money."
What does “fair value” mean?
Fair value is Synthos’s estimate of what one share is worth today, based on our model of the company’s future cash generation and the risks to it. It is not a price target or a prediction of where the stock trades next quarter — it’s the price where we think risk and reward are balanced. Above it, you’re paying for outcomes better than our base case; below it, the market is offering a margin of safety.
The model’s inputs and weightings are proprietary — they’re the product. What we publish is the output, plus an independent, public-math cross-check further down the page (“Check our number”) so you can judge it for yourself.
What do the 5 tiers mean? (Core · Tactical · Watch · Hold · Avoid)
The Road Ahead
What we expect to matter in each window, and the evidence that would prove us wrong.
Short term 0-6 months
Neutral- Driver
- "Two-sided and close to the event. The constructive half: at $617.14 the stock is 6.8% below the 52-week high of $662.49 and 40.5% above the low of $439.11, sitting 4.3% above a rising 50-day moving average of $591.49 and 12.3% above a 200-day of $549.47, with RSI at 59.0 and MACD at +4.23 — an intact uptrend at the 80th percentile of its annual range. It has also beaten consensus EPS five quarters running, twice by roughly 20%, and the beats have not been small. The cautious half: consensus for the year, $18.089, sits ABOVE the midpoint of management's own $4.5-5.0 billion net-income guidance, which on 269.9 million shares is $16.64 to $18.48; the sell-side is split 18 buy, 22 hold and 6 sell with a Hold consensus and a $500 low target, 19.0% below spot; and the third-quarter print lands 2026-08-20, sixteen days from this dive, against a $4.71 estimate. Our base fair value of $640 is 3.7% above the close. Paying a 34x multiple two weeks before a print, into a cyclical whose largest market management still expects to fall 15 to 20%, is not a setup with an edge in it."
- What we’re watching
- "The 2026-08-20 print against $4.71 of diluted EPS and $10,811.8M of equipment net sales, and specifically whether full-year net-income guidance of $4.5-5.0 billion is narrowed upward, held or cut — that range is wider than the market's tolerance and its resolution is the event. Production and Precision Ag operating margin, which fell from 22.0% to 15.7% in the April quarter; that is the single largest profit pool in the company and it is where the damage is. Whether Construction and Forestry sustains 20%-plus growth against management's own outlook of construction equipment up about 5% and roadbuilding up about 10% — the segment is growing three times faster than its stated end markets, which is either share gain or a restocking effect. And dealer and company inventory of used and new large ag equipment, which the downcycle's duration depends on."
- Confidence
- Medium
Medium term 6-24 months
Tailwind- Driver
- "The medium-term case is cycle recovery plus mix, and the estimate set carries it: consensus diluted EPS of $18.089 in fiscal 2026 (17 analysts), $22.479 in fiscal 2027 (17) and $27.211 in fiscal 2028 (12) — a 50.4% increase across two years off a trough. The mechanism does not require heroics. Fiscal-2023 diluted EPS was roughly $34.62 on revenue of $60.2 billion; the fiscal-2028 consensus of $27.21 is still 21% below that peak on a revenue base consensus puts at $48.8 billion of equipment net sales, so the recovery being priced is partial rather than complete. Two of Deere's four segments are already in recovery — Construction and Forestry operating profit up 48% and Small Ag and Turf up 25% in the April quarter — and only Production and Precision Ag is falling. Deere has also compressed its own cost base through the trough: fiscal-2025 selling, general and administrative expense fell 5.9% to $4,241M while research and development ROSE 0.9% to $2,311M, which is the right shape for a company protecting its technology position through a cycle. Financial Services net income is guided at about $860 million and is counter-cyclical in the sense that it earns on the installed base rather than on new unit sales."
- What we’re watching
- "Whether Production and Precision Ag margin recovers from 15.7%; on $17 billion of net sales, every 100 basis points there is $170 million of operating profit and roughly $0.48 of EPS. Whether the US and Canada Large Ag market bottoms — management's fiscal-2026 outlook has it down 15 to 20% after an already severe fiscal 2025, and North American revenue fell 20.7% in fiscal 2025 while international was flat. Whether precision-technology attach rates and the recurring-revenue model produce visible margin support rather than only marketing material; the vendor file gives no precision-ag revenue line and neither does the 10-Q's segment table, so this cannot currently be measured from the sources in the contract. Whether the buyback resumes at scale: repurchases fell from $7,216M in fiscal 2023 to $4,007M in fiscal 2024 to $1,138M in fiscal 2025, an 84% reduction across two years, which is prudent in a downcycle and also removes the largest single support the shares had."
- Confidence
- Medium
Long term 2+ years
Tailwind- Driver
- "The long-run case is the one the knowledge base actually makes, and it is a good one even at the weight a single 2023 episode deserves. business_breakdowns (2023-05-18, conviction 85) calls Deere 'the key enabler of low-cost global food with a widening competitive advantage in industrial agriculture equipment'; at conviction 80 it quantifies the moat as roughly twice the dealer density of competitors, giving 30-45 minute service response against 1.5 hours, which in equipment that must run inside a two-week harvest window is not a convenience but a purchase criterion; at conviction 85 it argues the integrated guidance, telematics and data layer creates switching costs and network effects; and at conviction 70 it records that the X9 combine roughly doubles harvest speed from 2.2 to over 5 miles per hour. The 2015 invest_like_the_best claim frames the demand side — a nine-billion-person world needs more food from the same land — and Deere's own capital allocation is consistent: $2,311M of research and development in a trough year, 5.2% of revenue and higher in dollars than the prior year. Whatever the cycle does, the installed base ratchets and the technology content per machine rises."
- What we’re watching
- "Whether the software and data layer ever becomes a disclosed revenue line. It is the entire bull case in the knowledge base and it is currently invisible in the segment table, which means it cannot be graded. Whether right-to-repair regulation erodes the service-and-parts annuity that the dealer-density moat monetises. Whether Chinese and Indian manufacturers move up-market in small agriculture, where Deere's Small Ag and Turf margin of 20.6% is now above the group average. Succession and continuity: John C. May has led the company since 2019, and the file records a NEW chief financial officer — Terry Brent Norwood filed a Form 3 on 2026-05-11 as Senior Vice President and CFO — which is a change worth tracking rather than a concern. And the structural question underneath everything: whether farm income supports a replacement cycle at all without the government bridge payments the one 2026-dated knowledge-base claim identifies as flowing straight through to Deere."
- Confidence
- Medium
Exponential Potential
"Rated 5 — a real technology slope attached to a machinery replacement cycle, and the knowledge base's best material is precisely about the slope. The business_breakdowns lane (2023-05-18) argues that Deere's integrated guidance, telematics and data layer creates 'Apple-like switching costs and network effects' (conviction 85); that See-and-Spray — spraying only where a camera detects a target — can cut farmer chemical cost 50 to 70% (conviction 70); that by opening its data platform to startups and incumbents on an App Store model Deere makes the industry spend to improve its own platform while owning the top software layers (conviction 75); and that the connected installed base is the deployment surface for computer vision toward full farm autonomy (conviction 65). Deere's own disclosure supports the direction: Production and Precision Ag is named for the technology, and research and development ran $2,311M in fiscal 2025 — 5.2% of revenue and UP 0.9% in a year revenue fell 11.6%, which is the correct behaviour and is why the trough margin is what it is. The ceiling is arithmetic. Precision agriculture sells more content per machine; it does not sell more machines, and the number of machines is set by farm income, which is set by crop prices and government payments. The one 2026-dated claim in the lane (odd_lots, conviction 55) makes exactly that point from the other direction: government bridge payments 'pass straight through the farmer P&L to land, equipment and input companies like John Deere.' A 5: genuine software optionality inside a machine that only sells when the farmer has money."
What could take this further than the base case — and where the market may be underpricing it. Full forward-growth and acceleration math in Deeper analysis, §4 below.
Deeper analysis
Technicals, fundamentals, valuation, and the full expert-claim evidence panel — the detail behind the numbers above.
> ### Earnings in 16 days — 2026-08-20
> Deere reports third-quarter fiscal 2026 results on 2026-08-20. Consensus is $4.71 of diluted EPS on $10,811.8M of equipment net sales. Management's full-year net-income guidance of $4.5-5.0 billion implies $16.64 to $18.48 of diluted EPS on 269,937,425 shares; the consensus of $18.089 sits ABOVE the midpoint. The verdict below is set with that timing and that gap as explicit inputs.
Reference table
| Street consensus | $691.58 (+12.1%) · median $707.50 · high $812 · low $500 — 19.0% BELOW spot · 18 buy / 22 hold / 6 sell across 46 analysts, consensus "Hold" |
| Valuation | 34.9x trailing GAAP diluted EPS ($17.71) · 34.1x FY2026E · 27.5x FY2027E · 22.7x FY2028E · vendor evToEBITDATTM of 19.4x REJECTED as a captive-finance artefact |
| Revenue definition — the SCHW problem in a different costume | inc_a.revenue is TOTAL net sales and revenues (equipment + finance income + other). est.revenueAvg is EQUIPMENT NET SALES ONLY. FY2025: $44,665M total against $38,286M equipment. Comparing the FY2026 consensus of $41,640M to the reported $44,665M shows a 6.8% DECLINE where the equipment business is forecast to GROW 8.8% — a 15.6-point error |
| Leverage — the vendor describes a different company | Vendor: net debt $55,660M, net-debt/EBITDA 4.91x, debt/equity 2.34x, interest coverage 2.88x. The 10-Q's supplemental consolidating data at 2026-05-03: Financial Services carries $54,567M of the $63,822M of borrowings against $64.4B of earning assets. Equipment Operations net debt is $3,165M |
| Management guidance (half-weighted) | FY2026 net income $4.5-5.0 billion (= $16.64–$18.48 diluted EPS). Segment outlook: Production & Precision Ag DOWN 5-10%, Small Ag & Turf up ~15%, Construction & Forestry up ~20%, Financial Services net income ~$860M. Industry outlook: US/Canada Large Ag DOWN 15-20% |
| Conviction | Low — 11 KB claims, 8 of them (72.7%) from a single 2023-05-18 episode of one show. Stripping that channel collapses the lane to 3 claims: one from 2015, one basket call, one neutral |
| Technicals | −6.8% from the 52-week high of $662.49, +40.5% above the low of $439.11; +4.3% above the 50-DMA, +12.3% above the 200-DMA; RSI 59.0; MACD +4.23; 12-month +23.2% vs SPY +24.3% — level |
What the experts actually said 9 traceable claims on DE · showing the highest-conviction voices
“Pounding the table on these megacap energy/industrial 'power' names — they've underperformed and trade very cheap two years out versus Mag 7/software, and are needed for the AI power buildout.”
“Deere is the key enabler of low-cost global food with a widening competitive advantage in industrial agriculture equipment.”
“Deere offloads capital/inventory intensity to dealers, runs ~25-30% gross margin, low-to-mid-teens net on the AG business at $20-28B revenue.”
Every claim reconciles to a real claim_id in the Synthos knowledge base — this is the evidence the verdict is built on, not vibes. Management (the company itself) is shown but half-weighted; one cautionary voice is included on purpose.
Price & moving averages 12 months · 50 & 200-day averages · 52-week range
Solid line = price · dashed line = 50-day average · dotted line = 200-day average · the two thin horizontal lines mark the 52-week high and low. Price above both averages is an uptrend.
Data summary: last close $630.33, 3% above the 50-day average ($611), 12% above the 200-day average ($563) — an uptrend. 5% below the 52-week high of $662, 44% above the 52-week low of $439.
Bollinger Bands 20-day average ± 2 standard deviations
The shaded band widens when the stock gets more volatile. Riding the upper edge = strong momentum (sometimes stretched); the lower edge = weak / potentially oversold.
Data summary: price $630.33 is currently inside the band (band $584–$650).
RSI (14) momentum gauge · 0–100
Above 70 (overbought zone, shaded) = overbought, below 30 (oversold zone, shaded) = oversold. Currently 55.
MACD 12 / 26 / 9 · trend & momentum
The MACD line crossing above the signal line (bars flip to the up color) = momentum turning up; crossing below (bars flip to the down color) = turning down. Bar height = the size of that gap.
Data summary: MACD is currently above its signal line by 1.64, positive momentum.
Relative performance vs S&P 500 & its sector (XLI (sector)), set to 100 a year ago
Solid = DE · dashed = S&P 500 · dotted = XLI (sector). A rising line means it is beating that benchmark — the sector line shows whether it is a leader or laggard within its own group.
Forward revenue & earnings actual → estimate · "FY" = fiscal year, "E" = estimate
Darker bars = actual results, brighter = analyst estimates. Taller bars to the right = expected growth.
Key stats an RIA wants
1. What the business is, and the disclosure trap inside it
Deere & Company, Moline, Illinois; chairman and chief executive John C. May; approximately 73,100 employees; NYSE-listed. Fiscal year ends in late October or early November — fiscal 2025 ended 2025-11-02, and the April 2026 quarter ended 2026-05-03.
Four reportable segments, per the 10-Q and the earnings release:
- Production & Precision Ag (PPA) — large tractors, combines, sprayers, and the guidance, telematics and autonomy technology stack.
- Small Ag & Turf (SAT) — smaller tractors, hay and forage equipment, turf and utility.
- Construction & Forestry (CF) — construction equipment, compact construction, forestry, and roadbuilding (Wirtgen).
- Financial Services (FS) — John Deere Capital Corporation, which finances the equipment.
The revenue-definition trap, stated precisely because it changes the answer
Deere reports two revenue lines and the vendor payload uses BOTH without labelling either.
From the Q2 FY2026 earnings release, verbatim: "Worldwide net sales and revenues increased 5 percent, to $13.369 billion, for the second quarter of 2026 and rose 8 percent, to $22.981 billion, for six months. Net sales were $11.778 billion for the quarter and $19.779 billion for six months, compared with $11.171 billion and $17.980 billion last year, respectively."
| Basis | Q2 FY2026 | What it includes |
|---|---|---|
| Net sales | $11,778M | Equipment sales only |
| Finance and interest income | $1,314M | Financial Services |
| Other income | $277M | — |
| Total net sales and revenues | $13,369M | All of the above |
Now the vendor file:
inc_qfor 2026-05-03 reports $13,369M — the total basis.earn_calfor 2026-05-21 reportsrevenueActual$11,778M — the net sales basis.est.revenueAvgfor the year ended 2025-11-02 is $38,286.0M againstinc_a.revenueof $44,665M — so the estimate block is on the net sales basis too.
The consequence. est.revenueAvg for fiscal 2026 is $41,639.9M. A reader comparing that to the reported fiscal-2025 revenue of $44,665M computes a 6.8% decline. Compared to the correct base of $38,286M, it is an 8.8% increase. The error is 15.6 percentage points and it flips the sign. Every revenue growth figure in this dive states which basis it uses.
A second, smaller inconsistency in the same family. earn_cal.revenueActual is not on a consistent basis across periods: for the quarter ended 2025-07-27 it reports $11,783M, which equals the vendor's inc_q total figure for that quarter; for the quarter ended 2026-05-03 it reports $11,778M, which equals the filing's net sales. The basis switches between fiscal 2025 and fiscal 2026 and the field is not usable for a growth series.
And a third: the vendor's fiscal-2025 quarterly comparatives do not match the filing
The Q2 FY2026 release states prior-year total net sales and revenues of $12,763M for the April 2025 quarter and $21,272M for the first half. The vendor's inc_q reports $12,525M and, with the January 2025 quarter, $20,787M — a shortfall of $485M, or 2.3%. The vendor's fiscal-2025 annual total of $44,665M is correct, so the discrepancy lies in the quarterly allocation. The filing wins: every year-on-year quarterly comparison in this dive is computed from the earnings release, not from inc_q.
2. The quarter, segment by segment — this is where the whole story is
Second quarter fiscal 2026, ended 2026-05-03, from the earnings release (US$M):
| Q2 FY2026 | Q2 FY2025 | Change | |
|---|---|---|---|
| Production & Precision Ag net sales | $4,503 | $5,230 | −14% |
| Small Ag & Turf net sales | $3,485 | $2,994 | +16% |
| Construction & Forestry net sales | $3,790 | $2,947 | +29% |
| Financial Services revenues | $1,366 | $1,385 | −1% |
| Other revenues | $225 | $207 | +9% |
| Total net sales and revenues | $13,369 | $12,763 | +5% |
| Production & Precision Ag operating profit | $706 | $1,148 | −39% |
| PPA operating margin | 15.7% | 22.0% | −630 bp |
| Small Ag & Turf operating profit | $719 | $574 | +25% |
| SAT operating margin | 20.6% | 19.2% | +140 bp |
| Construction & Forestry operating profit | $561 | $379 | +48% |
| CF operating margin | 14.8% | 12.9% | +190 bp |
| Financial Services operating profit | $251 | $207 | +21% |
| Total operating profit | $2,237 | $2,308 | −3% |
| Net income attributable to Deere | $1,773 | $1,804 | −2% |
| Diluted EPS | $6.55 | $6.64 | −1% |
Read the two halves of that table against each other and the whole investment question is visible.
Small Ag & Turf's operating margin (20.6%) is now HIGHER than Production & Precision Ag's (15.7%), having been 280 basis points lower a year ago. That inversion has never been the normal state of this company — PPA is the premium, technology-loaded, high-horsepower business and it has historically carried the group. Its margin has fallen 630 basis points in twelve months because volume fell 14% into a fixed cost base.
Construction & Forestry is growing three times faster than its own stated end markets. Management's fiscal-2026 industry outlook is construction equipment up about 5%, compact construction up about 5%, global roadbuilding up about 10%, global forestry down about 5% — and the segment grew 29%. That is either share gain, restocking, or a favourable comparison, and the file does not distinguish between them. We flag it as the single most likely place for a positive surprise and also the single most likely place for a disappointment when the comparison hardens.
For the first half: PPA net sales $7,666M (−8%) with operating profit $845M (−43%); SAT $5,653M (+19%) with profit $916M (+31%); CF $6,460M (+31%) with profit $698M (+57%); FS profit $552M (+17%). Total operating profit $3,011M (−3%). Net income $2,429M against $2,673M, EPS $8.97 against $9.82.
The multi-year record, on the total-revenue basis
| Fiscal year | Total net sales and revenues | Growth | Operating income | Net income | EPS (vendor, basic) | R&D | SG&A |
|---|---|---|---|---|---|---|---|
| 2020 | $34,722M | — | $4,368M | $2,751M | $8.77 | $1,644M | $3,446M |
| 2021 | $43,033M | +23.9% | $7,663M | $5,963M | $19.14 | $1,587M | $3,200M |
| 2022 | $51,282M | +19.2% | $9,026M | $7,131M | $23.42 | $1,912M | $3,645M |
| 2023 (peak) | $60,248M | +17.5% | $14,591M | $10,166M | $34.80 | $2,177M | $4,309M |
| 2024 | $50,518M | −16.1% | $11,427M | $7,100M | $25.72 | $2,290M | $4,507M |
| 2025 | $44,665M | −11.6% | $8,416M | $5,027M | $18.56 | $2,311M | $4,241M |
From the fiscal-2023 peak: revenue −25.9%, operating income −42.3%, net income −50.6%, EPS −46.7%. That is what an agricultural downcycle looks like and it is why a 34x multiple on the trough is not automatically expensive — but it is also why every forward number in this dive is a cycle call rather than a growth call.
Two things Deere did through the trough that are worth recording. Selling, general and administrative expense fell 5.9% from $4,507M to $4,241M. Research and development ROSE 0.9% from $2,290M to $2,311M — 5.2% of revenue, the highest ratio in the six-year record. Cutting overhead while protecting technology spend is the correct behaviour in a cyclical trough and it is also part of why the fiscal-2025 margin fell as far as it did.
3. Geography — the downcycle is North American
| Region | FY2025 | share | FY2024 | change |
|---|---|---|---|---|
| United States | $23,974M | 52.5% | $30,242M | −20.7% |
| Western Europe | $6,550M | 14.3% | $6,189M | +5.8% |
| Latin America | $5,607M | 12.3% | $5,538M | +1.2% |
| Asia, Africa, Oceania and Middle East | $4,243M | 9.3% | $4,359M | −2.7% |
| Canada | $3,735M | 8.2% | $3,900M | −4.2% |
| Central Europe and CIS | $1,575M | 3.4% | $1,488M | +5.8% |
| Total (as supplied) | $45,684M | $51,716M | −11.7% |
The seg_geo block over-counts by $1,019M against reported revenue of $44,665M (2.3%) — the difference is the −$1,019M "Other" reconciling line that appears in seg_prod and is absent here. We use the shares rather than the absolute figures and state the reconciliation gap.
The reading is unambiguous: US revenue fell 20.7% while Western Europe, Latin America and Central Europe all GREW. This is a North American large-agriculture problem, not a global one, and it lines up exactly with management's own outlook — US and Canada Large Ag down 15 to 20% against Europe flat to up 5% and Asia flat.
seg_prod reconciles exactly for fiscal 2025 — Financial Products $6,296M + Compact Construction $6,492M + Forestry $1,124M + PPA $16,960M + Roadbuilding $3,552M + Small Agriculture $7,215M + Turf $2,731M + Material Reconciling Items $1,314M + Other −$1,019M = $44,665M, matching reported revenue to the dollar-million. But the taxonomy changes every few years (fiscal 2023 uses an entirely different category set, and the fiscal 2022 row is corrupt — Construction & Forestry $1M, PPA $19M, Small Ag & Turf $10M, which are units rather than millions). We use fiscal 2025 and fiscal 2024 only, and discard fiscal 2022 outright.
4. The balance sheet — where the vendor describes a different company
This is a captive-finance structure and the vendor's leverage block does not know it. The vendor reports, as of the fiscal-2025 balance sheet:
| Vendor metric | Value | What it implies |
|---|---|---|
netDebt | $55,660M | A heavily levered industrial |
netDebtToEBITDATTM | 4.909x | Near covenant territory for an industrial |
debtToEquityRatioTTM | 2.341x | — |
interestCoverageRatioTTM | 2.884x | Thin |
currentRatioTTM | 0.786x | Working-capital strain |
enterpriseValueTTM | $222,846M | 33.7% above market capitalisation |
The 10-Q's supplemental consolidating data settles it. At 2026-05-03 (US$M):
| Equipment Operations | Financial Services | Eliminations | Consolidated | |
|---|---|---|---|---|
| Cash and cash equivalents | $5,917 | $1,988 | — | $7,905 |
| Marketable securities | $173 | $1,257 | — | $1,430 |
| Financing receivables — net | $102 | $42,814 | — | $42,916 |
| Financing receivables securitised — net | $1 | $6,099 | — | $6,100 |
| Trade accounts and notes receivable — net | $1,579 | $8,001 | $(2,009) | $7,571 |
| Equipment on operating leases — net | — | $7,514 | — | $7,514 |
| Inventories | $8,188 | — | — | $8,188 |
| Property and equipment — net | $8,004 | $31 | — | $8,035 |
| Total assets | $44,397 | $69,549 | $(6,945) | $107,001 |
| Short-term borrowings | $397 | $15,235 | — | $15,632 |
| Short-term securitisation borrowings | $1 | $5,928 | — | $5,929 |
| Long-term borrowings | $8,857 | $33,404 | — | $42,261 |
| Total borrowings | $9,255 | $54,567 | — | $63,822 |
| Total liabilities | $23,765 | $62,721 | $(6,945) | $79,541 |
| Adjusted total stockholders' equity | $20,585 | $6,828 | — | $27,413 |
> Equipment Operations net debt = $9,255M − $5,917M cash − $173M marketable securities = $3,165M.
> Financial Services borrowings of $54,567M sit against $64,428M of financing receivables, securitised receivables, operating-lease equipment and trade receivables — a matched book at approximately 8.0x its $6,828M of equity, which is normal for a captive lender.
The vendor reports consolidated net debt of $55,660M and a 4.91x leverage ratio; the filing shows that the industrial company carries $3,165M of net debt against $20,585M of adjusted equity. We use the split, and we reject the consolidated ratios as lenses.
Consequentially rejected: netDebtToEBITDATTM (4.909x), debtToEquityRatioTTM (2.341x), debtToAssetsRatioTTM (59.96%), financialLeverageRatioTTM (3.904x), interestCoverageRatioTTM (2.884x — computed against $3.0B of interest expense that is overwhelmingly Financial Services' cost of funds, matched against finance income on the other side of the income statement), currentRatioTTM (0.786x — a finance book has no meaningful current ratio), evToEBITDATTM (19.446x) and enterpriseValueTTM ($222,846M).
An industrial enterprise value, method stated. Deducting Financial Services' book equity from the market capitalisation and adding Equipment Operations net debt gives $166,589M − $6,828M + $3,165M = $162,926M. That is the number a reader should carry, and it is 26.9% below the vendor's $222,846M. We do not compute an industrial EV/EBITDA multiple from it, because the segment operating-profit series in the sources available covers only two quarters and building a trailing industrial EBITDA from it would require estimates the contract does not permit.
One genuine, non-artefact balance-sheet observation. Equipment Operations inventories rose from $7,406M at fiscal year-end to $8,188M at 2026-05-03, up 10.6% in two quarters, while Production and Precision Ag net sales fell 8% in the same half. daysOfInventoryOutstandingTTM is 98.7 and the cash conversion cycle 135.4 days. Inventory building against a falling largest segment is the classic pre-markdown signature in machinery, and it is the item we would look at hardest on 2026-08-20.
5. Cash flow and capital returns
| Fiscal year | Operating cash flow | Capex | Free cash flow | Buybacks | Buyback change |
|---|---|---|---|---|---|
| 2022 | $4,699M | $3,788M | $911M | $3,597M | — |
| 2023 | $8,589M | $4,468M | $4,121M | $7,216M | — |
| 2024 | $9,231M | $4,802M | $4,429M | $4,007M | −44.5% |
| 2025 | $7,459M | $4,228M | $3,231M | $1,138M | −71.6% |
The buyback has fallen 84.2% in two years, from $7,216M to $1,138M. That is prudent capital allocation in a downcycle — Deere is not levering the industrial balance sheet to buy stock into falling earnings — and it also removes the largest single support the shares had. Diluted share count fell from 293.6M in fiscal 2023 to 271.7M in fiscal 2025, a 7.5% reduction; in the April 2026 quarter it was 270.8M, only 0.3% lower year on year. The shrink has essentially stopped.
Note that "capex" for Deere is not comparable to an ordinary industrial's. capexToDepreciationTTM is 1.804 and capexToRevenueTTM 8.9%, both far above a normal machinery company, because the figure includes equipment placed on operating lease by Financial Services — $7,514M of such equipment sits on the balance sheet. Free cash flow of $3,231M is therefore understated as a measure of the industrial business's cash generation, and we decline to use priceToFreeCashFlowRatioTTM (44.2x) as a valuation lens.
Dividend. dividendPerShareTTM is $6.48, a 1.05% yield; profile.lastDiv is null. That $6.48 is the trailing-twelve-month total, not the declared quarterly rate — the standing labelling trap. The archive does not contain a filing that states the current declared quarterly dividend, and we say so rather than back it out: the four quarterly payments implied by the trailing total average $1.62, and dividendPayoutRatioTTM of 36.7% on trailing EPS of $17.71 is arithmetically consistent with that. No forward dividend run-rate is asserted.
6. Valuation — priced in or room?
At $617.14, on 269,937,425 shares (market cap $166.59B):
| Trailing (TTM to 2026-05-03) | FY2026E | FY2027E | FY2028E | |
|---|---|---|---|---|
| Equipment net sales (estimate basis) | — | $41,639.9M (12 analysts) | $44,767.2M (12) | $48,846.3M (8) |
| Growth vs FY2025 equipment net sales of $38,286M | — | +8.8% | +7.5% | +9.1% |
| Total net sales and revenues (reported basis) | $46,858M | not forecast | — | — |
| Diluted EPS | $17.71 | $18.089 (17) | $22.479 (17) | $27.211 (12) |
| P/E | 34.9x | 34.1x | 27.5x | 22.7x |
| Management guidance (net income) | — | $4.5–5.0B = $16.64–$18.48 EPS | — | — |
| Price / Sales (total basis) | 3.56x | — | — | — |
| Dividend yield (trailing) | 1.05% | — | — | — |
Estimate coverage is strong — 17 analysts on both fiscal-2026 and fiscal-2027 EPS, and 12 on fiscal 2028. But the fiscal-2028 EPS distribution is extraordinarily wide: $21.13 low, $27.21 mean, $35.48 high — a range of 68% of the mean. That is not analyst carelessness; it is an honest expression of how uncertain the shape of an agricultural recovery is two years out, and we treat the fiscal-2028 figure accordingly.
The single most important valuation fact in this dive. Consensus fiscal-2026 EPS of $18.089 implies net income of approximately $4.88 billion. Management's own guidance range is $4.5 to $5.0 billion. Consensus therefore sits above the midpoint of $4.75 billion and only 2.4% below the top of the range. The street is modelling the good end of the company's own guidance, which leaves the estimate exposed in the direction that matters sixteen days before a print.
est.ebitdaAvg and est.ebitAvg are unreliable in this file and are not used. The fiscal-2023 row is the clearest demonstration: ebitdaAvg of $9,831M and ebitAvg of $7,577M against actual operating income of $14,591M and vendor EBITDA of $17,476M — understated by 48% and 44% respectively, and netIncomeAvg of $9,468M exceeds the ebitAvg of $7,577M, which is arithmetically impossible. All forward valuation runs on epsAvg and, with the definitional correction, revenueAvg.
Peer context. The vendor peer set is short and mostly apposite: Caterpillar ($403.6B), Cummins ($87.8B), PACCAR ($71.6B), CNH Industrial ($13.9B), AGCO ($7.5B), plus Honeywell ($78.9B) and Union Pacific ($176.1B), which are not comparable. CNH and AGCO are the only direct agricultural-machinery peers and together they are worth $21.4B against Deere's $166.6B — Deere is 7.8 times the two of them combined, which is itself the clearest available statement of the industry structure. No peer multiples are supplied in the file, so no peer-multiple comparison is drawn.
6a. What today's price assumes (the inversion)
At $617.14 — 34.1x the fiscal-2026 consensus and 27.5x fiscal 2027 — the price embeds the following falsifiable claims, each with a number and a date:
- Fiscal-2026 diluted EPS of $18.089, i.e. net income of about $4.88 billion. (Consensus-derived; 17 analysts.) Management guides $4.5-5.0 billion. The first half delivered $8.97, so the second half must deliver $9.12 against $8.68 a year earlier — +5.1% in a year when the first half was down 8.7%. The nearest test is 2026-08-20 against $4.71.
- Fiscal-2027 diluted EPS of $22.479 — a 24.3% increase — on equipment net sales of $44,767M, +7.5%. (Consensus-derived; 17 and 12 analysts.) That requires roughly 300 basis points of operating-margin recovery, which in turn requires Production and Precision Ag to recover from a 15.7% margin. It is the largest single assumption in the two-year path.
- US and Canada Large Agriculture bottoms in fiscal 2026. (Management-disclosed industry outlook: DOWN 15 to 20%, half-weighted as company framing; our assumption on the bottoming.) US revenue already fell 20.7% in fiscal 2025. The price does not contain a third down year.
- Construction and Forestry sustains growth well above its stated end markets. (Our number, from the segment table against management's own industry outlook.) The segment grew 29% against end markets management expects up about 5 to 10%. This is the most fragile assumption in the price, because it is the one where the gap between the delivered number and the disclosed market backdrop is widest, and no disclosure in the file explains it.
- The market keeps paying roughly 27-28x the forward year through a recovery. (Our number.) At 20x the fiscal-2028 consensus the stock is $544; at 28x it is $762. Deere has historically de-rated as earnings recover, because the market pays a high multiple on trough earnings and a low one on peak earnings — which means the earnings recovery in this price is partly self-cancelling.
6b. The return bridge (why the multiple moves)
Expected return over the next twelve months decomposes as: diluted EPS growth (+24.3%, from FY2026E $18.089 to FY2027E $22.479) + multiple drift (COMPRESSION, from 34.1x to roughly 23.5x on the respective forward year, −31%) + dividend yield (+1.05%) ≈ +4% to +5%.
Our base case assumes substantial multiple compression, and this is the defining feature of valuing a cyclical off a trough rather than a de-rating call. Today the market pays 34.1x on the current fiscal year because earnings are depressed. Our $640 is 23.5x the fiscal-2028 consensus and 28.5x fiscal 2027. As earnings normalise, the multiple must fall or the price becomes indefensible on any historical basis — Deere earned $34.80 a share at the fiscal-2023 peak and the shares did not trade at 34x that.
This means almost none of the expected return survives the multiple. If the multiple simply HELD at 27.5x on the fiscal-2028 consensus, the price would be $748 (+21.2%); at 20x, $544 (−11.9%). The entire spread between a good and a bad outcome is a multiple assumption on a cyclical, and we have no informational edge on it.
The bull case at $815 is 30.0x the fiscal-2028 consensus mean, or equivalently 23.0x the fiscal-2028 consensus HIGH of $35.48 — i.e. it can be reached either by a full-cycle earnings recovery at a normalised multiple or by a partial recovery at a premium one. The bear case at $460 is 22.5x the fiscal-2027 consensus LOW of $20.418, which is a third down year meeting a normalised multiple.
6c. Variant perception (where we differ, what would surprise)
- We differ from every screen on what this company's revenue and leverage actually are, and both corrections are large. On revenue, the estimate block and the income statement use different definitions six billion dollars apart, and a naive growth calculation is wrong by 15.6 percentage points in the wrong direction. On leverage, the vendor's $55.66 billion of net debt and 4.91x describe a consolidated entity of which $54.567 billion of borrowings and $64.4 billion of matched earning assets belong to a captive lender; Equipment Operations carries $3,165 million of net debt. A screen ranking Deere on leverage is ranking it as one of the most indebted industrials in the S&P 500. It is not. This correction cuts in the stock's favour and is reported for that reason.
- We differ from the street on the estimate itself, and the disagreement is specific. Consensus fiscal-2026 EPS of $18.089 sits above the midpoint of management's $4.5-5.0 billion net-income guidance. That is unusual: analysts normally cluster at or below the midpoint of a range this wide. Watchable event: 2026-08-20. Either guidance is narrowed upward — validating the estimate — or it is held, in which case a $4.71 third quarter still leaves a fourth quarter that has to do the work.
- We have NO variant perception on the business itself, and that is a verdict input. The knowledge base's substantive material is eight claims from a single May 2023 episode, and everything it argues — dealer density, the data layer, See-and-Spray, the App Store model — is well known and three years old. The one 2026-dated claim in the entire lane (odd_lots, conviction 55) is a neutral observation that government bridge payments to farmers flow through to Deere. We are not differentiated on this company; we are differentiated on its data.
- Positive surprise that would force a re-rate: the 2026-08-20 print raising the low end of net-income guidance above $4.7 billion, or Production and Precision Ag operating margin recovering above 18%. A second, structural one: any disclosure that quantifies precision-technology or software revenue as a separate line, which would allow the knowledge base's best argument to be measured for the first time.
- Negative surprise that would break the thesis: guidance cut below $4.5 billion; Production and Precision Ag margin below 14%; Construction and Forestry growth decelerating below 10% as the comparison hardens; or Equipment Operations inventory rising further from $8,188M against falling large-ag volumes, which is the markdown precursor.
Synthos fair values
Anchors are multiples of the fiscal-2028 consensus diluted EPS distribution (mean $27.211, low $21.133, high $35.480, 12 analysts), cross-checked against the fiscal-2027 distribution (mean $22.479, low $20.418, 17 analysts), which is the better-covered year.
- Bear ~$460 — 22.5x the FY2027 consensus LOW of $20.418. Cross-check: 16.9x the FY2028 mean; 4.7% above the 52-week low of $439.11. The scenario: a third down year in US large agriculture, Production and Precision Ag margin below 14%, Construction and Forestry decelerating as the comparison hardens, inventory markdowns against the $8,188M balance, and guidance cut. −25.5%.
- Base ~$640 — 23.5x the FY2028 consensus MEAN of $27.211, equivalently 28.5x FY2027E. Cross-check: 35.4x the FY2026 consensus. Sensitivity, stated openly: 21x the FY2028 mean gives $571 — below spot — and 26x gives $708, near the street. The answer lives in a 21-26x band on a normalising earnings base. The scenario: fiscal 2026 lands inside guidance, large agriculture bottoms, the two recovering segments hold, and the multiple compresses as earnings normalise. +3.7%, plus about 1.05% of dividend.
- Bull ~$815 — 30.0x the FY2028 consensus mean of $27.211, equivalently 23.0x the FY2028 consensus HIGH of $35.48. Cross-check: the street high target is $812. The scenario: a full cycle recovery toward the fiscal-2023 peak earnings power, precision technology visibly lifting mix, and Construction and Forestry sustaining its current momentum. This bull case can be reached two ways — a full earnings recovery at a normal multiple, or a partial one at a premium — and both routes are named. +32.1%.
Base is 3.7% above spot; asymmetry approximately 1.26:1 to the upside (25.5% down, 32.1% up). A base case at the current price, sixteen days before a print, on a name where consensus already sits in the upper half of management's own guidance range and the sell side rates it Hold, is a Watch by construction.
7. Knowledge base — eleven claims, eight of them from one episode
Raw hits: 11 (entity matches on Deere). Used: 11. Discarded for collision: 0. Channels: 4. Breadth after concentration test: effectively 3.
The concentration is the finding. business_breakdowns supplies 8 of 11 claims — 72.7% — and all eight carry the same date, 2023-05-18, meaning they are eight claims distilled from a single episode of a single show, recorded more than three years before this dive. That is not breadth; it is one source rendered eight times.
Concentration sensitivity test. Stripping business_breakdowns takes the lane from 10 bullish / 1 neutral to 1 bullish basket claim (2025), 1 bullish claim from 2015, and 1 neutral claim from 2026. The lane does not survive its own concentration. We report the result and weight the conviction rating accordingly.
No bare-ticker sweep was run on the string "DE" and we say why. Two letters that also denote Germany, Delaware and a Spanish preposition would return noise at a rate that makes the sweep uninformative, and the entity extraction has already identified every claim in which the distiller judged Deere to be a subject. This is a stated limitation, not an omission.
The eight claims from the single 2023 episode — quoted, because they are substantively good
> 2023-05-18 · bullish · conviction 85 · business_breakdowns · no named speaker
> "Deere is the key enabler of low-cost global food with a widening competitive advantage in industrial agriculture equipment."
> 2023-05-18 · bullish · conviction 85
> "Deere's integrated guidance/telematics/data layer creates Apple-like switching costs and network effects, driving rising gross profit over time."
> 2023-05-18 · bullish · conviction 80
> "Deere's ~2x dealer density gives 30-45min service response vs 1.5hr for competitors — decisive service moat in mission-critical equipment."
> 2023-05-18 · bullish · conviction 75
> "By opening data to startups/incumbents (App Store model), Deere makes the whole industry spend to improve its platform while owning the top software layers."
> 2023-05-18 · bullish · conviction 70
> "See-and-spray (spray only where camera detects disease) can cut farmer product cost 50-70%; total upside still early but structurally advantaged."
> 2023-05-18 · bullish · conviction 70 · horizon: fact
> "The X9 combine roughly doubles harvest speed (2.2 to 5+ mph) — a tectonic labor-reduction and productivity shift for farmers."
> 2023-05-18 · bullish · conviction 65
> "Deere leverages its large connected installed base to deploy AI/computer vision toward full farm autonomy — the next platform phase."
> 2023-05-18 · neutral · conviction 70 · horizon: fact
> "Deere offloads capital/inventory intensity to dealers, runs ~25-30% gross margin, low-to-mid-teens net on the AG business at $20-28B revenue."
Two observations about this set that matter more than its content. First, the dealer-density claim is the only one that is genuinely hard to replicate and it is the one the financial statements cannot show you — service response time does not appear in any filing. Second, the final claim's own numbers are now stale in a specific and testable way: it describes 25-30% gross margin and low-to-mid-teens net margin on an agricultural business at $20-28B of revenue. Deere's fiscal-2025 gross margin was 36.5% and net margin 11.3% on $44.7B of total revenue, so the margin structure has improved and the scale has doubled since the claim was made — which is evidence the bullish half of the same episode was directionally right, and evidence that the specifics have expired.
The three claims that survive the concentration test
> 2015-10-07 · bullish · conviction 60 · invest_like_the_best · no named speaker
> "Buffett is accumulating John Deere as a 10-year hold, betting a 9-billion-person world will need more food and thus farm equipment."
Eleven years old. The ten-year hold it describes has now elapsed. It is a demand-side framing rather than a live view and we weight it near zero.
> 2025-07-20 · bullish · conviction 92 · skill 2.0 · jordi_visser
> "Pounding the table on these megacap energy/industrial 'power' names — they've underperformed and trade very cheap two years out versus Mag 7/software, and are needed for the AI power buildout."
The highest-conviction, highest-skill claim in the lane — and a basket claim in which Deere's relationship to the AI power buildout is asserted rather than argued. Deere makes agricultural and construction machinery; it is not obviously a "power" name. We use it as sector-level colour and not as name-level conviction, and note that it is 12.5 months old against a stock that has returned 23.2% over twelve months, so whatever cheapness it identified has partly been realised.
> 2026-03-19 · neutral · conviction 55 · odd_lots · no named speaker
> "Government bridge payments pass straight through the farmer P&L to land, equipment and input companies like John Deere and Nutrien—hyper-channeled monetary inflation."
The only 2026-dated claim in the lane, and the most useful one for the current cycle question. It identifies the transmission mechanism by which farm-support policy becomes Deere revenue — which is directly relevant to whether US large agriculture bottoms in fiscal 2026 — and it is deliberately neutral rather than bullish. It is also a claim about a support that can be withdrawn.
Conclusion. The Synthos knowledge base has a strong, well-articulated, three-year-old qualitative view of Deere's moat and a near-empty view of the current cycle. Everything substantive comes from one episode; everything recent is neutral or a basket. Conviction rating: Low. Breadth: 4 nominal, 3 effective. Net conviction: positive but stale and concentrated. No conviction premium is applied to the fair value.
8. Data integrity — what we rejected from the vendor file and why
Eleven findings. DE is the most definitionally treacherous file in this batch: the arithmetic is largely sound and the DEFINITIONS are not.
1. est.revenueAvg and inc_a.revenue are DIFFERENT REVENUE DEFINITIONS — the largest defect in this file. inc_a.revenue of $44,665M for fiscal 2025 is total net sales and revenues, including finance and interest income and other income. est.revenueAvg for the same year is $38,286.0M — equipment net sales only. The filing confirms the split: "Worldwide net sales and revenues increased 5 percent, to $13.369 billion... Net sales were $11.778 billion for the quarter." A reader comparing the fiscal-2026 consensus of $41,639.9M to the reported $44,665M computes a 6.8% DECLINE; against the correct $38,286M base it is an 8.8% INCREASE. The error is 15.6 percentage points and it reverses the sign. Every revenue figure in this dive states its basis.
2. earn_cal.revenueActual switches basis between fiscal years — REJECTED as a growth series. For the quarter ended 2025-07-27 it reports $11,783M, equal to the vendor's inc_q total figure. For the quarter ended 2026-05-03 it reports $11,778M, equal to the filing's net sales. The same field carries two definitions and no flag.
3. The vendor's fiscal-2025 quarterly revenue does not reconcile to the filed comparatives — the FILING WINS. The Q2 FY2026 release gives prior-year total net sales and revenues of $12,763M for the April 2025 quarter and $21,272M for the first half; inc_q gives $12,525M and $20,787M — a $485M (2.3%) shortfall. The vendor's fiscal-2025 annual total of $44,665M is correct, so the defect is in the quarterly allocation. All year-on-year quarterly comparisons in this dive use the earnings release.
4. Every leverage and coverage ratio is a captive-finance artefact — REJECTED as lenses. The vendor reports netDebt of $55,660M, netDebtToEBITDATTM of 4.909x, debtToEquityRatioTTM of 2.341x, financialLeverageRatioTTM of 3.904x, interestCoverageRatioTTM of 2.884x and currentRatioTTM of 0.786x. The 10-Q's supplemental consolidating data at 2026-05-03 shows Financial Services carrying $54,567M of the $63,822M of consolidated borrowings against $64,428M of financing receivables, securitised receivables, operating-lease equipment and trade receivables — a matched book at approximately 8.0x its $6,828M of equity. Equipment Operations carries $9,255M of borrowings against $6,090M of cash and marketable securities: net debt of $3,165M. We use the split.
5. enterpriseValueTTM and evToEBITDATTM are meaningless for this structure — REJECTED and replaced. $222,846M and 19.446x treat a lender's funded balance sheet as enterprise value. An industrial enterprise value — market capitalisation less Financial Services book equity plus Equipment Operations net debt — is approximately $162,926M, 26.9% below the vendor's. We do not compute an industrial EV/EBITDA from it because building a trailing industrial EBITDA would require estimating quarters the sources do not supply.
6. est.ebitdaAvg and est.ebitAvg are unusable and demonstrably so — NOT USED. The fiscal-2023 row reports ebitdaAvg of $9,831M and ebitAvg of $7,577M against actual operating income of $14,591M and vendor EBITDA of $17,476M — understatements of 44% and 48%. In the same row netIncomeAvg of $9,468M EXCEEDS ebitAvg of $7,577M, which is arithmetically impossible. All forward valuation runs on epsAvg and, with the correction in finding 1, revenueAvg.
7. epsdiluted is NULL on every row and eps is the basic figure. The vendor's fiscal-2025 eps of 18.56 is basic; the earnings release gives diluted EPS of $6.55 for the April 2026 quarter and $8.97 for the half against the vendor's 6.56 and 8.99. The differences are rounding, but the field is systematically absent and all diluted figures here are filing-sourced.
8. seg_geo over-counts by $1,019M (2.3%) — shares used, absolutes not. The six fiscal-2025 regional lines sum to $45,684M against reported revenue of $44,665M; the difference is the −$1,019M "Other" reconciling line that seg_prod carries and seg_geo omits. We use regional shares and state the gap.
9. The seg_prod fiscal-2022 row is corrupt — DISCARDED. It reports Construction & Forestry $1M, Production & Precision Ag $19M and Small Ag & Turf $10M for a company with $51.3 billion of revenue that year — units mistaken for millions. The fiscal-2025 and fiscal-2024 rows are sound (fiscal 2025 sums to $44,665M, exactly matching reported revenue), but the taxonomy changes materially every few years, with fiscal 2023 using an entirely different category set. Only fiscal 2025 and 2024 are used.
10. lastDividend is absent and dividendPerShareTTM of $6.48 is the trailing total — and the archive cannot supply the declared rate. profile.lastDiv is null and none of the three filings in the archive states the current declared quarterly dividend. We therefore assert no forward run-rate and quote only the trailing figure, noting that the implied average quarterly payment is $1.62 and that dividendPayoutRatioTTM of 36.7% on trailing EPS of $17.71 is arithmetically consistent.
11. One insider record carries a FUTURE transaction date. The Form 3 filed 2026-05-11 for the incoming chief financial officer includes a row with transactionDate "2026-12-10" — four months after this dive — for 629 employee stock options at $468.90, alongside rows dated 2024-12-13 and 2025-12-11. This is a data error in the vendor's insider block; we report the Form 3 as an officer appointment and place no weight on the option grant dates.
Not defects, correctly reported: seg_prod sums exactly to reported revenue for fiscal 2025 and fiscal 2024; revenuePerShareTTM of $173.480 × 270.1M gives $46,857M against our filing-derived trailing total revenue of $46,858M; netIncomePerShareTTM of $17.708 reconciles to the same trailing net income; capexToDepreciationTTM of 1.804 and capexToRevenueTTM of 8.9% are arithmetically correct and correctly reflect the inclusion of operating-lease equipment; effectiveTaxRateTTM of 23.0% is consistent with the filings; and the share count reconciles exactly (10-Q cover 269,937,425 against 269,940,000 implied by market capitalisation — 0.001%).
Non-equity tripwire — checked and passed. DE is $1 par value common stock, NYSE-listed, 269,937,425 shares outstanding per the 10-Q cover. Beta is 0.897; the dividend is variable; the 52-week band of $439.11 to $662.49 is a 50.9% range; volume was 711,624 shares (roughly $439M of turnover). This is common equity.
9. Technicals
- Price $617.14. −6.8% from the 52-week high of $662.49; +40.5% above the 52-week low of $439.11. Position within the annual range: 80th percentile.
- Both moving averages below and rising: +4.3% above the 50-day at $591.49, +12.3% above the 200-day at $549.47, with the 50-day comfortably above the 200-day. An intact but not extended uptrend.
- RSI 59.0 — mid-range. MACD +4.23 — positive.
- Maximum drawdown from peak over the trailing year: −6.8%, i.e. the stock has not had a meaningful correction inside the period.
- Relative performance is almost exactly index-like, which for a deep cyclical in a downcycle is itself informative: 3-month +6.7% vs SPY +7.6%; 6-month +15.9% vs SPY +11.1% and QQQ +15.7%; 12-month +23.2% vs SPY +24.3% and QQQ +30.8%. Deere has kept pace with the index through the two worst earnings years in a decade — which is the market pricing the recovery, not the trough.
- Sentiment is the most cautious in this batch: 18 buy, 22 hold, 6 sell across 46 analysts, consensus "Hold". Target $691.58 (+12.1%), median $707.50, high $812 (+31.6%), low $500 — 19.0% BELOW spot. The target range spans 62% of the consensus, the widest dispersion in this batch, and six analysts have outright sell ratings. We read that as genuine, well-informed disagreement about the shape of an agricultural recovery, and it is the opposite of the unanimity seen on BLK and TJX.
Today's move
DE closed 2026-08-04 at $617.14, up $12.08 or 2.00% from $605.06. It opened at $610.66, traded $598.69 to $622.00, and closed near the upper end of that range on 711,624 shares — roughly $439M of turnover, a low-volume session. No company-specific news appears in this file for 2026-08-04; the last company event was the 2026-05-21 earnings release and the 2026-05-28 10-Q. A 2% gain on thin volume ten weeks after the last disclosure and sixteen days before the next is market beta, and the entry price carries about two points of it.
10. Insiders — thin, routine, and one data error
Eight records, all between 2026-03-05 and 2026-05-11:
| Person | Role | Form / Type | Detail |
|---|---|---|---|
| Terry Brent Norwood | Senior VP & CFO | Form 3 (initial statement) | 1,113 shares held; option grants of 585 at $377.01, 587 at $448.03 and 629 at $468.90 |
| Kellye L. Walker | Senior VP & Chief Legal Officer | Form 4, F-InKind | 568 shares withheld at $577.26; 7,878 held after |
| Sheila Talton | Director | Form 4, A-Award | 293 shares; 9,093 held after |
| Tami A. Erwin | Director | Form 4, A-Award | 293 shares; 4,167 held after |
| R. Preston Feight | Director | Form 4, A-Award | 293 shares; 823 held after |
The reading, and it is short. There is not a single open-market purchase or open-market sale in this file. The only disposition is an F-InKind — shares withheld by the issuer to satisfy tax on a vesting award, which is not a sale by any economic definition. Three directors received identical 293-share annual grants on the same day. That is a neutral signal and it is reported as neutral.
The one item of information content is a management change. Terry Brent Norwood filed a Form 3 on 2026-05-11 as Senior Vice President and Chief Financial Officer — an initial statement of beneficial ownership, which is filed when an officer first becomes subject to Section 16. Deere has a new chief financial officer, appointed in the middle of a downcycle, and that is worth tracking rather than worrying about. Note also that one of his option rows carries a transaction date of 2026-12-10 — four months in the future — which is a vendor data error and is flagged in Section 8.
11. Verdict, kill-criteria and flip conditions
Watch.
What is genuinely excellent, and the knowledge base and the filings agree: roughly twice the dealer density of competitors, producing a 30-to-45-minute service response against a competitor's 1.5 hours in equipment that must run inside a two-week harvest window; an integrated guidance, telematics and autonomy layer whose switching costs our best qualitative source calls "Apple-like"; research and development of $2,311M in the trough year — 5.2% of revenue and UP in dollars while revenue fell 11.6%; an Equipment Operations balance sheet carrying $3,165M of net debt against $20,585M of adjusted equity; a matched, conservatively capitalised captive lender guided to about $860M of net income; five consecutive EPS beats, two of them near 20%; and two of four segments already recovering hard — Construction and Forestry operating profit +48%, Small Ag and Turf +25%.
What we are declining to pay for: 34.1x the fiscal-2026 consensus, where that consensus of $18.089 sits above the midpoint of management's own $4.5-5.0 billion net-income guidance; Production and Precision Ag operating margin down from 22.0% to 15.7% on volume down 14%, in the largest and most profitable segment; a company industry outlook that still has US and Canada Large Agriculture down 15 to 20%; Equipment Operations inventory up 10.6% in two quarters against a falling large-ag business; a buyback down 84% in two years; a Hold sell-side consensus with six sell ratings and a $500 low target; a base fair value of $640, 3.7% above spot and 7.4% below the street; and a print in sixteen days.
The distinction that matters. We are not saying Deere is a bad business or that the cycle will not turn. We are saying that the market is already paying a trough multiple for a recovery it has not seen, that consensus for the current year sits in the upper half of the company's own guidance range, that our own arithmetic lands below the street's on a name where the knowledge base's substantive material is a single three-year-old episode, and that there is a quarterly report in a fortnight. In the Synthos frame, that is a Watch by construction. The correction we do have — that this company's leverage and revenue are both materially misdescribed by the standard data — makes Deere safer than it screens, not cheaper.
Pre-registered KILL criteria — what would take this to Avoid:
- Fiscal-2026 net-income guidance cut below $4.5 billion on 2026-08-20 or at the fourth-quarter report.
- Production and Precision Ag operating margin below 14% in any quarter. It was 22.0% a year ago and 15.7% last quarter.
- Equipment Operations inventory above $8.5 billion with large-ag volumes still falling — the markdown precursor.
- Construction and Forestry growth decelerating below 10%, which would remove the offset that is currently holding consolidated revenue up.
- A third consecutive down year signalled for US and Canada Large Agriculture in the fiscal-2027 industry outlook.
- A break below the 200-day moving average at $549.47 on company-specific news.
Pre-registered FLIP conditions — what would take this to Buy — Tactical:
- A price below approximately $545 (roughly 20x the fiscal-2028 consensus, near the 200-day moving average), which would put the base case at +17% and make the risk/reward genuinely asymmetric. This is the most likely path to a Buy and it is 11.7% below today's close.
- The 2026-08-20 print raising the low end of net-income guidance above $4.7 billion, which would confirm the estimate rather than leaving it exposed.
- Production and Precision Ag margin recovering above 18%, which on $17 billion of net sales is roughly $390 million of operating profit and about $1.10 of EPS against the current run-rate.
- Any disclosure that quantifies precision-technology or software revenue as a separate line. This is worth roughly one tier on its own, because the entire qualitative bull case rests on a data layer that is currently invisible in every financial statement Deere publishes.
- A recent, named-speaker, name-level knowledge-base claim. The lane's only 2026-dated entry is neutral and the substance is three years old.
Where DE fits in the Synthos Framework Portfolio. The industrial-cyclical sleeve, at 0% today with a 1.5-2% target on a fill near $545 or a confirmed guidance raise on 2026-08-20. On batch overlap: Deere appears in Eaton's vendor peer set and both are large-cap industrials, but they are opposite trades — Eaton is a growth cyclical at a 52-week high with a 1.3 book-to-bill; Deere is a value cyclical in year two of a downcycle with its largest market still contracting. Owning both is a barbell on industrial capital spending rather than a concentration, and if only one is owned, the choice is a view on whether data-centre electrification or agricultural replacement demand inflects first. The evidence in these two dives says electrification already has and agriculture has not. Logged as a tracked Synthos call (Watch) as of 2026-08-04 at $617.14.
Single biggest risk: Large Agriculture has not stopped falling. Management's own fiscal-2026 industry outlook is US and Canada Large Ag down 15 to 20% on top of a fiscal 2025 in which US revenue fell 20.7%, and South American tractors and combines down about 15%. Production and Precision Ag — $16,960 million of fiscal-2025 net sales and the highest-margin business in the company — has already seen operating margin fall 630 basis points year on year. At 34.1x current-year earnings, with a consensus estimate sitting above the midpoint of the company's own range and $8,188 million of inventory on the Equipment Operations balance sheet, a third down year is not in the price and there is nothing in the valuation to absorb it.
Provenance & disclosures
- Traceability: 11 tagged knowledge-base claims name Deere across 51,928 distilled claims (raw hits 11, entity matches 11, used 11, discarded for collision 0; breadth 4 nominal, 3 effective; net conviction positive but stale and concentrated). Concentration sensitivity test run and reported:
business_breakdownssupplies 8 of 11 claims (72.7%), ALL DATED 2023-05-18 — eight claims extracted from a single episode of one show recorded more than three years before this dive. Stripping that channel takes the lane from 10 bullish / 1 neutral to 1 bullish basket claim, 1 bullish claim from 2015 and 1 neutral claim from 2026. The lane does not survive its own concentration. The three surviving claims are:invest_like_the_best(2015-10-07, bullish, conviction 60, no named speaker — Buffett accumulating Deere as a ten-year hold, now eleven years old and weighted near zero);jordi_visser(2025-07-20, bullish, conviction 92, skill 2.0 — the highest weight in the file — but a BASKET claim on "megacap energy/industrial power names" in which Deere's relationship to the AI power buildout is asserted rather than argued, used as sector colour only); andodd_lots(2026-03-19, neutral, conviction 55, no named speaker — the only 2026-dated claim in the lane, identifying government bridge payments as passing through the farmer profit-and-loss to equipment companies including John Deere). No claim carries a managementspeaker_role; ten of eleven carry no named speaker and are attributed only to a channel. No case-sensitive bare-ticker sweep was run on the two-letter string "DE" and the reason is stated in Section 7: the collision rate with Germany, Delaware and Spanish-language usage would make the result uninformative. All quotes are verbatim from the stored claim text. - Data as-of: fundamentals — second-quarter fiscal 2026 income statement and balance sheet as at 2026-05-03, from the 10-Q filed 2026-05-28 and the earnings release furnished as Exhibit 99.1 to the 8-K of 2026-05-21 (61,363 characters, present in full with segment results, consolidating data and guidance); annual figures for fiscal 2025 from the 10-K filed 2025-12-18 · estimates 2026-08-04 · prices 2026-08-04, quote timestamp 1785873599 = 2026-08-04T19:59:59Z ($617.14, +2.00%; 50-DMA $591.49; 200-DMA $549.47; RSI 59.0; MACD +4.23) · knowledge-base claims 2026-08-04. Fiscal-year note: Deere's fiscal year ends in late October or early November. "Fiscal 2025" means the year ended 2025-11-02; "Q2 fiscal 2026" means the quarter ended 2026-05-03. All figures come from the Synthos vendor data file for DE or from the SEC filings in the DE archive; no figure comes from memory, recall or external retrieval.
- Filing archive contents: 10-K filed 2025-12-18 (fiscal 2025, 607,430 characters, financial-statement tables preserved); 10-Q filed 2026-02-26 (first quarter fiscal 2026); 10-Q filed 2026-05-28 (second quarter fiscal 2026, 317,810 characters — the primary source, including the supplemental consolidating balance sheet that separates Equipment Operations from Financial Services); 8-K filed 2026-05-21 carrying Exhibit 99.1, the full second-quarter earnings release with segment results, industry outlook, segment outlook and full-year net-income guidance; 8-K filed 2026-06-01 (Item 5.02 — director Dmitri Stockton will not stand for re-election at the 2027 annual meeting, explicitly not the result of any disagreement); 8-K filed 2026-07-15 (Item 8.01 — Deere Funding Canada Corporation sold $300,000,000 of 4.850% Notes due 2031, guaranteed by Deere & Company; a routine Financial Services funding transaction, immaterial against $54.6 billion of Financial Services borrowings).
- Where the filings contradicted or corrected the vendor (detailed in Section 8):
est.revenueAvgidentified as EQUIPMENT NET SALES whileinc_a.revenueis TOTAL NET SALES AND REVENUES — the fiscal-2025 bases are $38,286M and $44,665M, so the naive fiscal-2026 growth calculation is wrong by 15.6 percentage points and reverses sign;earn_cal.revenueActualshown to switch basis between fiscal 2025 and fiscal 2026 and rejected as a growth series; the vendor's fiscal-2025 quarterly revenue rejected in favour of the earnings release, which gives $12,763M for the April 2025 quarter against the vendor's $12,525M and $21,272M for the half against $20,787M; every leverage and coverage ratio rejected as a captive-finance artefact, with the 10-Q's supplemental consolidating data showing $54,567M of the $63,822M of borrowings inside Financial Services against $64,428M of earning assets and Equipment Operations net debt of $3,165M against the vendor's consolidated $55,660M;enterpriseValueTTMof $222,846M replaced with an industrial construction of approximately $162,926M, method stated;est.ebitdaAvg/ebitAvgrejected after the fiscal-2023 row was shown to understate actual operating income by 48% and to report net income exceeding EBIT;epsdilutedNULL on every row, with all diluted figures taken from the earnings release;seg_geoover-count of $1,019M identified and absolute figures declined in favour of shares; theseg_prodfiscal-2022 row discarded as corrupt (segment revenues reported in units rather than millions);dividendPerShareTTMof $6.48 identified as the trailing total, with no forward run-rate asserted because the archive does not contain the declared rate; and a future-dated insider transaction (2026-12-10) flagged as a vendor data error. Where vendor and filing AGREED — worth recording: the share count (10-Q cover 269,937,425 against 269,940,000 implied by market capitalisation — 0.001%);seg_prodfor fiscal 2025, which sums exactly to reported revenue of $44,665M;revenuePerShareTTMandnetIncomePerShareTTM, both reconciling to filing-derived trailing figures; andeffectiveTaxRateTTM. - Basis note: Deere reports on a GAAP basis only and publishes no non-GAAP earnings measure; analyst estimates and the earnings-calendar actuals are both struck on GAAP diluted EPS, and they reconcile (the April 2026 quarter's $6.55 filed against the calendar's $6.55). No GAAP-to-non-GAAP bridge is required and none is drawn. Management's fiscal-2026 net-income guidance of $4.5-5.0 billion is company framing and is half-weighted per house rule — but it is used as the primary check on the consensus estimate, because a guidance range and a consensus estimate for the same period are directly comparable and the gap between them is the single most useful fact in this dive.
- Estimate coverage: 12 analysts on fiscal-2026 equipment net sales and 17 on EPS; 12 and 17 on fiscal 2027; 8 and 12 on fiscal 2028. Coverage is good, but the fiscal-2028 EPS distribution is extraordinarily wide — $21.13 low, $27.21 mean, $35.48 high, a range equal to 68% of the mean — which we read as an honest expression of cycle uncertainty rather than as carelessness, and which is why the fiscal-2027 distribution is used as the bear-case anchor.
- Peer note: the vendor peer set contains two direct comparables — CNH Industrial ($13.9B) and AGCO ($7.5B) — plus Caterpillar ($403.6B), Cummins ($87.8B) and PACCAR ($71.6B) as adjacent machinery names, alongside Honeywell ($78.9B) and Union Pacific ($176.1B), which are not comparable. Deere at $166.6B is 7.8 times the combined market capitalisation of CNH and AGCO, which is the clearest available statement of the industry structure. No peer multiples are supplied in the file, so no peer-multiple comparison is drawn.
- Fair-value caveat: the $460 / $640 / $815 anchors are multiples of the fiscal-2028 consensus diluted EPS distribution (mean $27.211, high $35.480, 12 analysts) cross-checked against the fiscal-2027 distribution (mean $22.479, low $20.418, 17 analysts) — 22.5x the fiscal-2027 low for the bear, 23.5x the fiscal-2028 mean for the base, and 30.0x the fiscal-2028 mean (equivalently 23.0x the fiscal-2028 high) for the bull. Stated arithmetic, not a discounted cash flow. The base is sensitivity-disclosed: 21x the fiscal-2028 mean gives $571, below spot, and 26x gives $708, near the street. The base assumes substantial multiple COMPRESSION from 34.1x to roughly 23.5x as trough earnings normalise — which is the defining feature of valuing a cyclical off a trough, not a de-rating call, and it is why almost none of the 24.3% consensus EPS growth reaches the shareholder in the base case.
- Timing: second-quarter fiscal 2026 results were released 2026-05-21 and the 10-Q filed 2026-05-28. The next print is 2026-08-20, SIXTEEN DAYS after this dive — consensus $4.71 of diluted EPS on $10,811.8M of equipment net sales, with management's full-year $4.5-5.0 billion net-income guidance the item most likely to move the shares. The proximity of that print, combined with a consensus estimate sitting above the midpoint of that guidance range, is an explicit input to the Watch verdict. 2026-08-04 was a low-volume +2.00% session with no company-specific news in this file.
- Accessibility note: no information in this dive is conveyed by colour. All emphasis is carried by bold text, table structure and explicit labelling.
- Not investment advice. Independent research, educational and informational only, never personalised. No recommendation to buy, sell or hold any security is made to any person.
- Version: 2026-08-04-full.