Deere & Company is a 1837-founded global manufacturer of agricultural, turf, and construction equipment organized across Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services, employing roughly 73,100 people under CEO John C.
DE
· Industrials · Agricultural - Machinery
· Market cap $189.8B
QuantHub Original Research · Updated 2026-09-23
·
High QualityA-tier business, D-tier valuation, with 12.2% downside to $616.99 fair value.Expensive
DE is 11% above fair value. Patience may be rewarded.
QuantHub Research: Investment Thesis
Maturing Phase
Deere & Company is a 1837-founded global manufacturer of agricultural, turf, and construction equipment organized across Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services, employing roughly 73,100 people under CEO John C. May. Business quality is high on franchise strength but currently strained by the large-agriculture cycle: TTM gross margin is 35.7%, operating margin 19.0%, net margin 10.2%, and ROE 18.1%, while revenue and earnings each grew 7.0% in the most recent quarter. The stock is not cheap. At $703.12, the market cap is $189.8 billion, P/S is 3.98, trailing P/E is 38.93, P/FCF is 49.06, and EV/EBITDA is 22.09, a very_expensive regime versus five-year history. The blended fair value estimate of $616.99 implies 12.2% downside to fair value, and the shares sit at a 14.0% premium to that estimate, even though the analyst consensus is Buy with a $763.67 average target, 8.6% above the current price. In short, a durable franchise with a cyclical earnings base is priced for a recovery that the fiscal 2026 guidance does not yet show.
Deere is expensive, not cheap. The shares trade at 38.93x trailing earnings, 49.06x free cash flow, and 22.09x EV/EBITDA, a very_expensive regime relative to the company's own five-year history, and the $703.12 price is 14.0% above the $616.99 blended fair value estimate, implying 12.2% downside to fair value. The market appears to be pricing a trough-and-recovery in large agriculture and the durability of precision-ag technology, while the actual guidance points the other way: Deere expects U.S. and Canadian large-agriculture and South American tractor and combine markets to decline 15% to 20% in fiscal 2026, and fiscal 2026 Production and Precision Agriculture segment sales to decline about 10%. The gap between the sell-side consensus Buy rating and $763.67 average target, 8.6% above the current price, and the blended fair value estimate 12.2% below it, captures the disagreement: analysts are underwriting a fiscal 2027 inflection, while the valuation model is not willing to pay for it at nearly 39x trailing earnings.
12–18 Month Outlook
Over the next 18 months Deere faces a test of whether the large-agriculture cycle is bottoming. Management expects U.S. and Canadian large-agriculture and South American tractor and combine markets to decline 15% to 20% in fiscal 2026 and fiscal 2026 Production and Precision Agriculture segment sales to decline about 10%, after segment revenue fell 6% and operating profit fell 9% to $527 million in fiscal 3Q26. Offsetting that, revenue and earnings each grew 7.0% in the most recent quarter, TTM operating margin is 19.0%, and ROE is 18.1%, so the non-large-ag segments and precision-ag investments are still carrying weight. The valuation is the constraint: at 38.93x trailing earnings, 49.06x free cash flow, and 22.09x EV/EBITDA, the shares already discount a recovery, and the $616.99 fair value estimate implies 12.2% downside to fair value. If fiscal 2027 guidance confirms a trough, the Buy consensus and $763.67 average target become achievable; if the down cycle extends, the very_expensive multiple leaves little room for error.
Bull vs Bear
Bull Case
Deere's franchise is anchored by a 1837-founded brand and a four-segment portfolio spanning Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services, with roughly 73,100 employees and a global dealer and distribution network.
Profitability remains solid despite the down cycle, with TTM gross margin of 35.7%, TTM operating margin of 19.0%, TTM net margin of 10.2%, and ROE of 18.1%.
Revenue and earnings each grew 7.0% in the most recent quarter, showing that the mix outside the pressured large-agriculture segment is still contributing growth.
Free cash flow per share of $14.33 on revenue per share of $176.64 demonstrates that the business still converts a meaningful share of sales into cash even at a cyclical low.
The sell-side consensus is Buy with a $763.67 average target, 8.6% above the current $703.12 price, reflecting expectations that fiscal 2027 will mark a recovery in large-agriculture demand.
Bear Case
Valuation is stretched: at $703.12 the shares trade at 38.93x trailing earnings, 49.06x free cash flow, and 22.09x EV/EBITDA, a very_expensive regime versus five-year history, and the $616.99 fair value estimate implies 12.2% downside to fair value.
The large-agriculture cycle is deteriorating: Production and Precision Agriculture revenue fell 6% in fiscal 3Q26 and operating profit fell 9% to $527 million, and Deere expects fiscal 2026 segment sales to decline about 10%.
End-market demand is contracting, with Deere expecting U.S. and Canadian large-agriculture and South American tractor and combine markets to decline 15% to 20% in fiscal 2026, which pressures farmers' equipment budgets.
Tariffs are a direct margin headwind, with a direct incremental tariff impact of $502 million in the first nine months of fiscal 2026, net of recoveries.
The blended fair value estimate of $616.99 sits 12.2% below the current price, meaning the shares carry a 14.0% premium to fair value even as the earnings base is under pressure.
Leadership & Competitive Position
John C. May
Beats guidance75% of qtrs
Capital allocationGood
John C. May is identified as CEO of Deere & Company in the current research. The company operates a four-segment portfolio and has maintained TTM operating margin of 19.0% and ROE of 18.1% through a difficult large-agriculture cycle, while continuing to invest in precision agriculture, autonomy, and connected-fleet technology. No specific tenure, insider ownership, or guidance-beat history is provided in the current cited research.
Competitive Moat
stable
brandintangible assetsswitching costs
The current research describes Deere as a global manufacturer and distributor of a wide range of equipment across four primary segments, with a product line spanning medium tractors, combines, cotton pickers, sugarcane harvesters, sprayers, utility tractors, turf equipment, and construction and forestry machinery. No specific market share percentages are provided in the current cited research.
Disruption: Medium. The July 2026 FTC settlement broadening repair access could pressure repair-related economics, and AI, autonomy, and connected-fleet offerings introduce data governance, cybersecurity, adoption, and monetization risks.
QuantHub Research
Valuation
Multiple
Current
Median 3yr
Median 5yr
Min 5yr
Max 5yr
P/E
38.93x
16.03x
16.9x
10.57x
24.89x
P/S
3.98x
2.25x
2.35x
1.78x
2.8x
P/FCF
49.06x
26.08x
26.08x
21.72x
132.3x
P/S 3.98x vs 5yr range 1.78-2.8x (P25=1.78x, median=2.35x, P75=2.6x)
Price Outlook (5-Year)
Bear
$494
-6.5%/yr
Base
$617
-2.2%/yr
fair value
Bull
$740
1.4%/yr
Bear/Base/Bull anchored to QuantHub fair value estimate. Base = headline fair value; Bear −20%; Bull +20%.
Agricultural commodity-price volatility can constrain farmers' equipment budgets. Deere expects U.S. and Canadian large-agriculture and South American tractor and combine markets to decline 15% to 20% in fiscal 2026.
Large-agriculture cycle deterioration
high
Production & Precision Agriculture revenue fell 6% in fiscal 3Q26 and operating profit fell 9% to $527 million. Deere expects fiscal 2026 segment sales to decline about 10%.
Valuation correction
high
DE trades at 38.93x trailing earnings, 49.06x free cash flow, and 22.09x EV/EBITDA, while the $616.99 fair value estimate implies 12.2% downside from $703.12.
Tariffs and input-cost inflation
high
Direct incremental tariff impact was $502 million in the first nine months of fiscal 2026, net of recoveries, creating a material headwind to margins and pricing.
Interest rates and financing demand
medium
Higher borrowing costs can reduce equipment affordability and demand, while also affecting John Deere Financial customer financing volumes, portfolio quality, and funding economics.
Supply chain and production disruption
medium
Deere continues to identify supply-chain delays and disruptions as a risk. Disruptions could impede production, increase costs, and pressure margins even though no discrete current shutdown was reported.
Repair access and technology execution
medium
Broader repair access under the July 2026 FTC settlement could pressure repair-related economics, while AI, autonomy, and connected-fleet offerings introduce data governance, cybersecurity, adoption, and monetization risks.
Growth Engines
Precision agriculture technologyscaling
Deere's Production and Precision Agriculture segment targets large-scale farming with advanced practices, and the company continues to invest in AI, autonomy, and connected-fleet offerings, though the current research does not quantify the addressable market.
Small Agriculture and Turfmature
The segment serves dairy and livestock farmers, other crop producers, and residential, commercial, golf, and sports turf customers with utility tractors, mowers, utility vehicles, and implements, a broad but mature equipment market.
Construction and Forestrymature
The segment supplies earthmoving, roadbuilding, and forestry equipment including loaders, excavators, dozers, graders, pavers, and harvesters, a cyclical market tied to construction and logging activity.
Financial Servicesmature
John Deere Financial provides wholesale dealer financing, retail revolving charge accounts, and extended warranties, supporting equipment sales but exposing the company to interest-rate and credit conditions.
Deere research profile updated with leadership and segment detail
The current research confirms John C. May as CEO and details the four-segment structure spanning Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services, with roughly 73,100 employees.
2026-09-23
Deere trades at a very_expensive valuation regime
At $703.12, the shares carry a 38.93x trailing P/E, 49.06x P/FCF, and 22.09x EV/EBITDA, with the $616.99 fair value estimate implying 12.2% downside to fair value.
2026-09-23
Large-agriculture guidance points to a fiscal 2026 decline
Deere expects U.S. and Canadian large-agriculture and South American tractor and combine markets to decline 15% to 20% in fiscal 2026 and fiscal 2026 Production and Precision Agriculture segment sales to decline about 10%.
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?
DE is currently overvalued at $690.46 vs. our fair value estimate of $616.99 (-11% upside).
What is DE's fair value?
QuantHub Research estimates DE's fair value at $616.99 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?
Agricultural commodity and farm-income pressure: Agricultural commodity-price volatility can constrain farmers' equipment budgets. Deere expects U.S. and Canadian large-agriculture and South American tractor and combine markets to decline 15% to 20% in fiscal 2026. Large-agriculture cycle deterioration: Production & Precision Agriculture revenue fell 6% in fiscal 3Q26 and operating profit fell 9% to $527 million. Deere expects fiscal 2026 segment sales to decline about 10%. Valuation correction: DE trades at 38.93x trailing earnings, 49.06x free cash flow, and 22.09x EV/EBITDA, while the $616.99 fair value estimate implies 12.2% downside from $703.12.
What is the bull case for DE?
Deere's franchise is anchored by a 1837-founded brand and a four-segment portfolio spanning Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services, with roughly 73,100 employees and a global dealer and distribution network. Profitability remains solid despite the down cycle, with TTM gross margin of 35.7%, TTM operating margin of 19.0%, TTM net margin of 10.2%, and ROE of 18.1%. Revenue and earnings each grew 7.0% in the most recent qu
How confident is QuantHub in DE?
QuantHub has moderate conviction in DE. Research last updated 2026-09-23.