Deere & Company is a leading manufacturer of agricultural, construction, and forestry machinery, with a strong position in production and precision agriculture, small agriculture and turf, and construction and forestry segments.
DE
· Industrials · Agricultural - Machinery
· Market cap $156.23B
QuantHub Original Research · Updated 2026-05-04
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Medium QualityMedium-tier business, very expensive valuation with 22% upside to $708.19 fair valueCheapIn Buy Zone
DE is 22% below fair value and in buy zone. Consider adding to your position.
QuantHub Research: Investment Thesis
Scaling Phase
Deere & Company is a leading manufacturer of agricultural, construction, and forestry machinery, with a strong position in production and precision agriculture, small agriculture and turf, and construction and forestry segments. The company benefits from a durable competitive moat driven by its brand, intangible assets, and switching costs, supported by a CEO with deep institutional knowledge and a long tenure. Despite solid revenue growth of 16.3% in the most recent quarter and a strong return on equity of 18.9%, Deere faces earnings pressure with a 24.5% decline in earnings in the most recent quarter and a full-year net income decline forecast for FY2026. The stock trades at a high valuation with a trailing P/E of 32.48 and P/FCF of 43.69, reflecting a very expensive valuation regime. However, the stock has a 22.4% upside to a fair value estimate of $708.19, supported by growth in small agriculture and construction segments, offset by challenges in large agriculture. Deere is currently fairly priced to expensive given its growth prospects and risks, including tariff impacts, regulatory pressures, and competitive threats.
Deere is expensive due to high multiples including a trailing and forward P/E of 32.48 and a P/FCF of 43.69, reflecting investor expectations for growth despite recent earnings declines. The valuation is supported by analyst consensus Buy ratings and a 22% upside to fair value, but the stock is priced for continued execution on growth initiatives and margin recovery amid tariff and regulatory headwinds.
12–18 Month Outlook
Over the next 18 months, Deere is expected to experience revenue growth in small agriculture and construction segments but continued pressure in large agriculture. Earnings are forecasted to decline by 20-29% in FY2026 compared to FY2025. The stock trades at a very expensive valuation with limited upside beyond the 22% to fair value, exposing it to downside risk if earnings pressures persist or tariff and regulatory headwinds intensify.
Bull vs Bear
Bull Case
The company’s small agriculture and turf segment is expected to grow approximately 15% in FY2026, providing a strong growth engine.
Construction and forestry segment net sales are forecasted to increase about 10% year-over-year in FY2026, with price realization gains of 3%.
John Deere’s leadership under CEO John C. May, who has 29 years of company tenure, provides stability and deep institutional knowledge.
The company’s focus on technology innovation, including its LEAP Ambitions for 2030 corn yield goals, positions it as a tech-driven agriculture solutions provider.
The stock has a 22.4% upside to a fair value estimate of $708.19, indicating potential for price appreciation from current levels.
Bear Case
Earnings declined 24.5% year-over-year in the most recent quarter, reflecting significant pressure on profitability.
The construction and forestry segment saw a 12% decline in net sales and a 49% drop in operating profit in FY2025, highlighting cyclical weakness.
Tariff-related costs are expected to rise to $1.2 billion in FY2026, doubling prior year expenses and pressuring margins despite pricing actions.
Regulatory risks including EPA Right to Repair guidance and European emissions reporting requirements threaten Deere’s proprietary service margins and increase compliance costs.
Competitive threats from antitrust scrutiny and multi-state lawsuits could disrupt Deere’s service and repair business models.
Leadership & Competitive Position
John C. May
Tenure29 yrs
Beats guidance75% of qtrs
Capital allocationFair
John C. May has served as CEO since 2019 with a 29-year tenure at Deere, progressing through key operational and leadership roles. His deep company knowledge supports strategic continuity, though detailed capital allocation metrics are unavailable.
Competitive Moat
stable
intangible assetsswitching costsbrand
Deere leads the agriculture and construction equipment markets but specific market share data versus competitors is not available.
The full-year earnings report will provide clarity on the company's ability to manage tariff costs, regulatory challenges, and segment growth trajectories.
high
2026-02
EPA Right to Repair Implementation
New EPA guidance allowing farmers access to repair software may pressure Deere’s proprietary service margins and impact aftermarket revenue.
medium
2026-Q3
Tariff Cost Developments
Changes in steel and aluminum tariffs will affect Deere’s cost structure and margin outlook.
medium
Risks
Earnings Pressure
high
Earnings declined 24.5% year-over-year in the most recent quarter and full-year net income is forecasted to decline 20-29% in FY2026.
Tariff Costs
high
Tariff-related expenses are expected to rise to $1.2 billion in FY2026, doubling prior year costs and pressuring margins despite pricing actions.
Regulatory and Legal Risks
medium
EPA Right to Repair guidance and multi-state antitrust lawsuits threaten Deere’s service business and increase compliance costs.
Market Cyclicality
medium
Weak agricultural demand and expected 5-10% decline in large agriculture sales in FY2026 reflect cyclical headwinds impacting revenue and profitability.
Competitive Threats
medium
Ongoing FTC scrutiny and competitive pressures could erode Deere’s market position and service margins.
Growth Engines
Small Agriculture and Turfscaling
This segment represents about 20% of total revenue and is expected to grow approximately 15% in FY2026, driven by demand for turf and smaller agricultural equipment.
Construction and Forestryscaling
Construction and forestry equipment generated $11.4 billion in FY2025 with a forecasted 10% sales increase in FY2026, reflecting recovery in these cyclical markets.
Production and Precision Agriculturematuring
This largest segment accounts for approximately 40% of revenue but faces headwinds with large agriculture sales expected to decline 5-10% in FY2026 amid weak farm income.
This is AI-powered fundamental analysis built from scratch — not aggregated analyst ratings. Get this research for your entire portfolio plus daily briefings, research signals, and options income.
QuantHub research is focused on quality businesses with durable competitive advantages — companies we'd want to own for 3–5 years or more. We are not short-term traders. Every analysis is built around a single question: is this a great business available at a reasonable price for a long-term investor?
We start where most analysts finish: the fundamentals. For every company, our AI ingests years of financial statements — revenue, margins, free cash flow, and how the business has been valued by the market across multiple cycles. But numbers alone don't tell you whether a business is worth owning.
The harder work is qualitative. We assess the competitive moat: is it widening or eroding? We read the leadership track record — how capital has been allocated, whether management has earned trust through consistent execution. We look at what the market is afraid of, and whether that fear is priced in fairly or irrationally.
Valuation is always relative. A stock is cheap or expensive compared to its own history. We build scenario matrices anchored to 5-year historical multiples, then ask: what has to go right for the upside case, and what's the floor if it doesn't?
Finally, we write an 18-month forward outlook — not a price target, but a mental model of where this business will be and what the narrative will look like. Every note is dated and versioned. When material facts change, we update the thesis.
Frequently Asked Questions
Is DE undervalued?
Yes, DE appears undervalued at the current price of $578.39, trading below our fair value estimate of $708.19 (+22% upside). QuantHub considers this a buy zone.
What is DE's fair value?
QuantHub Research estimates DE's fair value at $708.19 based on our proprietary valuation model incorporating historical P/S, P/E, and P/FCF multiples over a 5-year range.
What are the key risks for DE?
Earnings Pressure: Earnings declined 24.5% year-over-year in the most recent quarter and full-year net income is forecasted to decline 20-29% in FY2026. Tariff Costs: Tariff-related expenses are expected to rise to $1.2 billion in FY2026, doubling prior year costs and pressuring margins despite pricing actions. Regulatory and Legal Risks: EPA Right to Repair guidance and multi-state antitrust lawsuits threaten Deere’s service business and increase compliance costs.
What is the bull case for DE?
The company’s small agriculture and turf segment is expected to grow approximately 15% in FY2026, providing a strong growth engine. Construction and forestry segment net sales are forecasted to increase about 10% year-over-year in FY2026, with price realization gains of 3%. John Deere’s leadership under CEO John C. May, who has 29 years of company tenure, provides stability and deep institutional knowledge. The company’s focus on technology innovation, including its LEAP Ambitions for 2030 corn