Deere (DE) Stock Falls 5% on Weak 2026 Outlook Despite Q4 Earnings Beat

TLDR

• Deere & Company shares dropped 5% despite beating Q4 earnings estimates with $3.93 per share versus expected $3.85
• Q4 revenue jumped 11% to $12.39 billion, crushing analyst expectations of $9.82 billion
• Full fiscal year 2025 net income fell 29% to $5.027 billion from prior year’s $7.100 billion
• Company forecasts fiscal 2026 net income between $4.00-$4.75 billion, below analyst estimates of $5.33 billion
• Small Agriculture & Turf margins collapsed to 1.0% from 10.1% due to tariff pressures and warranty costs

Deere & Company shares tumbled more than 5% in Tuesday trading despite the agricultural equipment manufacturer reporting fourth quarter results that topped Wall Street expectations. The stock decline came as investors focused on the company’s weaker-than-expected guidance for fiscal 2026.

Deere & Company, DE

The Moline, Illinois-based company posted fourth quarter earnings of $3.93 per share. That beat analyst estimates of $3.85 per share. Revenue surged 11% year-over-year to $12.39 billion, crushing consensus expectations of $9.82 billion.

But the headline numbers didn’t tell the whole story. Net income for the quarter actually dropped 14% to $1.065 billion from $1.245 billion in the year-ago period. The revenue beat came against easier comparisons from a year earlier.

For the full fiscal year 2025, Deere’s results showed the pressure building on the business. Net income fell 29% to $5.027 billion, or $18.50 per share. That compared to $7.100 billion, or $25.62 per share, in fiscal 2024.

Annual revenue decreased 12% to $45.684 billion. The year-over-year decline reflected weak demand in the large agriculture equipment market.

Margin Pressure Hits Hard

Operating margins across Deere’s business segments showed serious strain. The Small Agriculture & Turf division took the biggest hit. Margins in that segment collapsed to just 1.0% from 10.1% a year earlier.

The company blamed higher tariffs and increased warranty expenses for the margin compression. Deere had warned in August that it expected a pre-tax tariff impact of nearly $600 million in 2025.

The Trump administration’s tariff policies have hit manufacturing and industrial companies particularly hard. Firms that rely heavily on imported raw materials have seen costs spike.

Weak Outlook Spooks Investors

The real concern for investors came in Deere’s fiscal 2026 guidance. The company projects net income between $4.00 billion and $4.75 billion for the coming year. That range falls well below analyst estimates of $5.33 billion.

The weak outlook reflects continued pressure from multiple directions. Lower crop prices have squeezed farmers’ budgets. Rising production costs have added to their financial stress.

These factors have pushed farmers to delay big-ticket equipment purchases. Many are choosing to rent equipment or buy used units instead of new tractors and combine harvesters.

CEO Sees Light at End of Tunnel

The CEO acknowledged ongoing margin pressures from tariffs. He also cited persistent challenges in the large agriculture sector.

But May pointed to steps Deere is taking to weather the storm. The company is focusing on inventory management and cost control measures. These efforts should help the business navigate difficult market conditions.

Deere has explored several strategies to offset weak demand. The company considered shifting production to avoid tariff impacts. Higher pricing on equipment also made the list of potential moves.

Expanding its portfolio of used equipment represents another option. This approach could help capture demand from budget-conscious farmers who still need equipment upgrades.

The company also expects to benefit from two other business units. The forestry and small agriculture segments should provide some support. These divisions serve different customer bases that face their own market dynamics.

May expects ongoing margin pressures from tariffs to continue weighing on the large farm equipment unit through fiscal 2026.

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