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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
DE — frequently asked questions
Is Deere & Company overvalued?
In our latest published analysis dated 2026-09-21, DE looks meaningfully overvalued. The price recorded at analysis is 685 USD versus our fair value of 268 USD; the high endpoint is presented separately as potential value of 330 USD. That implies roughly 60.9% downside to fair value at that date.
Our latest published report, analyzed 2026-09-21, gives DE a fair value of 268 USD and a potential value of 330 USD. The conclusion is triangulated across multiple valuation models and weighted by reliability for Deere & Company's archetype; it is a dated research output, not a live price.
Should I buy DE now?
Our latest published rating for DE, analyzed 2026-09-21, is Sell. Deere & Company looks meaningfully overvalued at the analysis-date price of 685 USD versus fair value of 268 USD; potential value is 330 USD. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for DE?
The dedicated bear-case section in our report analyzed 2026-09-21 documents Deere & Company's material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is DE's rating?
Our latest published rating for DE, analyzed 2026-09-21, is Sell, with a published moat assessment of 8/10 (Narrow). It reflects our fair value of 268 USD, the potential value of 330 USD, and the price recorded at analysis (685 USD).
Este informe aún no se ha traducido. Actualice en unos minutos una vez que la cola de traducción se ponga al día.
§1 Resumen ejecutivoEN
Respuesta en 30 segundosSell
Precio frente a valor
Precio
$684.73
Valor razonable
$267.81
Valor potencial
$330.41
A fecha de
2026-09-21
Por qué puede funcionar
Accelerated grower adoption of precision agriculture telematics and autonomy drives higher equipment pricing realization and software subscription attach rates, supporting operating margin expansion above 18% as fleet replacement inflects.
Qué cambiaría nuestra opinión
Depressed agricultural crop commodity prices and elevated farm input costs cause commercial farmers to defer fleet modernization through FY2027.
We rate Deere & Company as a Sell because the stock trades at an extreme premium to its through-cycle earnings power.
On 2026-09-21, the report was prepared at a price of 684.73 USD. Our Fair value is 267.81 USD, and our Potential value is 330.41 USD. The report-date price trades 155.7% above our Fair value, representing 60.9% downside risk for investors.2
The primary risk to equity value is an extended farm recession where low crop prices cause farmers to delay machinery upgrades. If field tractor inventories pile up at dealerships, price cuts and factory slowdowns would drag operating margins below 11.0%, triggering a sharp valuation contraction toward peers.
The business can generate long-term value if commercial growers rapidly adopt automated precision software that cuts field operating expenses. Higher software attach rates and resilient construction equipment sales would expand profit margins and lift value toward our Potential value of 330.41 USD, though this upside remains secondary to downside risks from the report-date price.3
Precision Agriculture Telematics and Autonomy
Connected software delivers double-digit variable operating cost savings for farmers, strengthening customer loyalty and software recurring revenue.3
Dominant Dealer Network and Parts Availability
Deere's extensive dealership network ensures rapid field repair response times, defending leading market share and supporting high aftermarket margins.2
Switching Costs via Connected Operations Center and Precision Ag Software
Deere's integrated telematics and precision software ecosystem delivers double-digit variable operating cost reductions for commercial growers, embedding farm management data into the Operations Center and creating high operational switching costs.3
Recomendación de la casa
We rate Deere & Company a Sell because the market price of 684.73 USD on 2026-09-21 sits 155.7% above our Fair value of 267.81 USD, leaving no margin of safety against cyclical machinery demand contraction.2
Descripción general de la empresa
Deere & Company is a global leader in the production of agricultural, turf, construction, and forestry equipment and solutions. John Deere Financial provides financing for John Deere equipment, parts, services, and other inputs customers need to run their operations.
Its operations are managed through the Production & Precision Agriculture (PPA), Small Agriculture & Turf (SAT), Construction & Forestry (CF), and Financial Services (FS) operating segments. Equipment manufactured and distributed by the segment includes four-wheel-drive (4WD)/track and row crop tractors, harvesters, cotton pickers, cotton strippers, sugarcane harvesters, sugarcane loaders, and related harvesting front-end equipment.
§2 Caso bajistaEN
Under a severe multi-year stress test combining sustained crop price weakness, tractor inventory indigestion, and multiple compression, Deere's earnings power faces sharp contraction. If Production and Precision Ag revenue declines by >5% YoY rather than rebounding, consolidated operating margins compress below 11.0%, and the forward P/E de-rates toward peer levels of 15.88x, intrinsic equity value falls to 234.08 USD, exposing unhedged investors to severe capital loss from the market price of 684.73 USD as of 2026-09-21.
The downside scenario reflects an extended farm recession where depressed grain commodity prices and high operating input costs lead commercial producers to postpone fleet renewal across multiple seasons. Persistent channel inventory builds would force substantial wholesale discounting and factory under-absorption, pulling operating margins toward historical trough levels and triggering significant multiple compression against peer valuations. This pathway would be disconfirmed if farm cash receipts rebound promptly and retail sales inflect positively.
Cómo puede fallar esta tesis
Extended Farm Income Recession Triggers Multi-Year Equipment Demand Contraction
Depressed crop commodity prices and high input costs lead farmers to defer fleet modernization, causing Production & Precision Ag revenue to contract >5% YoY rather than rebounding 10% in FY2027.3
FV impact
-9.5%
Revenue and EPS growth 10 points lower for five years
Trigger
Within 24 months
Severe Operating Margin Compression From Dealer Destocking and Factory Under-Absorption
Señales de alerta temprana a vigilar
Los cinco acontecimientos que debilitarían nuestra tesis de inversión.
Indicates multi-year fleet replacement deferral by commercial farmers due to depressed crop cash receipts, falsifying the expected FY2027 demand rebound.
Actual:-7.29% modeled FY2026 growth
Alerta siContraction below -5.0% YoY in FY2027
02
§3 Foso competitivoEN
Narrow
Deere & Company possesses a Narrow economic moat grounded in structural switching costs and an unmatched dealer distribution network. The company's connected equipment ecosystem, anchored by the John Deere Operations Center telematics platform, integrates farm agronomic data, machinery fleet management, and automated field logistics. This proprietary integration creates high customer switching barriers: commercial growers who have accumulated multi-year soil, yield, and machine-performance datasets within Deere's architecture face substantial operational disruption and data migration friction if switching to rival equipment.
Complementing software switching costs is Deere's extensive, highly capitalized independent dealer network. In commercial agriculture, equipment uptime during narrow seasonal planting and harvesting windows is critical to farm economics. Deere's dealer density ensures rapid on-field service response times and immediate parts availability that smaller domestic and foreign original equipment manufacturers cannot match. This distribution network defends market leadership, commands premium average selling prices, and generates high-margin aftermarket parts and servicing revenues through cyclical downswings.
Beneficio económico
At the trough of the equipment cycle, Deere's economic profit narrows significantly as invested capital generates operating income of $8.42B, yielding a trough ROIC of approximately 7.56% that temporarily tracks its computed cost of capital (WACC of 7.78%). However, disciplined capital spending ($1.36B in FY2025) and structural gross margin resilience support substantial economic value added over full ten-year cycle horizons.1,2,5
8/ 10
Narrow
Sources of advantage
01Switching Costs via Connected Operations Center and Precision Ag Software — Deere's integrated telematics and precision software ecosystem delivers double-digit variable operating cost reductions for commercial growers, embedding farm management data into the Operations Center and creating high operational switching costs.Wide
02Unrivaled Dealer Distribution and Service Network — An extensive, well-capitalized independent dealership network provides rapid field service, superior parts availability, and customer retention during critical planting and harvesting windows, defending dominant market share.Wide
03Brand Equity and Manufacturing Scale Advantage — Decades of premium brand positioning and counter-cyclical manufacturing flexibility enable disciplined capital allocation across demand phases.
The highlighted cell is Fair value when every assumption sits at its base level ($267.81). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $3.3B after modeled reinvestment of $1.1B, with terminal value at 76.4% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to revenue, reinvestment, or gross margin resets materially.
Operating margins normalize toward mid-cycle levels following trough inventory absorption.
Replacement demand and precision ag technology attach rates drive moderate volume inflection entering FY2027.3
Capital reinvestment remains disciplined at historical maintenance rates.5
The base scenario projects that equipment demand navigates a cyclical trough before stabilizing through replacement demand and precision software adoption entering FY2027. For this trajectory to hold, channel inventories must clear without widespread wholesale discounting, and operating margins must normalize toward mid-cycle levels. This pathway would be disconfirmed if crop commodity prices weaken further, causing commercial producers to extend fleet deferrals. This path yields a target of $267.81 with a probability of 50.0%, representing an expected return of -60.9% relative to $684.73.3
Accelerated commercial adoption of autonomy and precision ag software drives superior equipment realization.3
Construction & Forestry sustains strong sales growth and resilient pricing power.
§7 Árbol de decisión de resultadosEN
Superado
Upgrade to Reduce; Avoid adding capital; re-examine order book duration and dealer inventory absorption to assess whether pricing resilience reflects sustainable demand.
Disparador: Production and Precision Agriculture revenue and consolidated operating margin exceed guidance ranges driven by stronger North American retail order delivery.
An upside surprise driven by commercial fleet replacement would suggest demand stabilization, yet the shares trade well above $267.81.
En línea
Maintain Sell; Maintain defensive positioning and continue liquidating holdings toward full exit given substantial distance to $267.81.
Disparador: Consolidated revenue and segment margins fall within revised guidance ranges alongside seasonal dealer inventory adjustments.
Meeting lowered expectations confirms that equipment demand remains in a cyclical contraction, keeping intrinsic valuation anchored near $267.81.
Fallo
Maintain Sell; Execute complete divestment of remaining exposure and track dealer discounting and credit loss provisions for evidence of trough formation.
Disparador: Equipment shipments and operating margins fall below revised full-year outlook as dealer destocking forces factory curtailments.
An earnings miss would signal that farm income compression is accelerating fleet modernization deferrals, exacerbating factory under-absorption.
Calidad de los beneficios
Operating cash conversion remains resilient through the equipment downcycle as disciplined working capital management supports healthy cash generation relative to net income. However, recent tractor inventory accumulation across dealership channels poses an earnings quality risk. If field inventory is not absorbed through retail demand, subsequent wholesale discounting and factory under-absorption would erode reported gross margins and indicate that past revenue recognition outpaced underlying farmer takeaway.3,4,5
ActualManagement adjusted international sales outlook downward due to persistent farmer caution in South America and Europe.
Por qué importa
Tracks whether commercial growers are resuming equipment fleet modernization or continuing to defer large machinery investments, directly determining the timing of revenue inflection and factory utilization.
Free cash flow generation remained robust at $6.10B in FY2025, underpinned by $7.46B in operating cash flow and capex moderation to $1.36B. Cash conversion (free cash flow divided by net income of $5.03B) exceeded 120%, illustrating Deere's ability to extract substantial cash even during contractionary demand phases. However, maintaining this conversion relies on avoiding dealer inventory absorption bottlenecks.3,4,5
Asignación de capital
Deere maintains a balanced capital allocation framework centered on shareholder distributions and liquidity maintenance. In FY2025, the company returned capital through $1.72B in dividends and $1.14B in share repurchases, reducing diluted from 293.6M in FY2023 to 271.7M in FY2025 and 269.6M currently. While total debt of $64.58B predominantly supports the Financial Services loan portfolio ($6.29B ), manufacturing remains conservative.
Return on invested capital has compressed from peak levels in FY2023 toward 7.56% at the cyclical trough as operating income normalized from $12.96B to $8.42B on an invested capital base of $89.85B.
At the cyclical trough, estimated ROIC of 7.56% temporarily tracks the computed WACC of 7.78%, indicating that economic spread compression is near its trough before mid-cycle recovery restores returns above capital costs.
Capex decreased from $1.64B in FY2024 to $1.36B in FY2025, enabling $6.10B in free cash flow.
Ingresos más recientes45,7 mil M US$CAGR de ingresos +6,2 %
Margen operativo18,4 %10 periodos fiscales
Flujo de caja libre más reciente6099 M US$FY2025
Deuda neta54,2 mil M US$FY2025
Desglose de la cuenta de resultadosCómo la escala del negocio se convierte en beneficio declarado.31 jul 2026
StockMarketAgent.AI
Ingresos12,6 mil M US$Coste de ventas−7939 M US$Beneficio bruto4669 M US$Gastos operativos−2077 M US$Beneficio operativo2592 M US$Partidas no operativas e impuestos−1213 M US$Beneficio neto1379 M US$
Datos del historial financiero
Ingresos
12.608.000.000 US$
Coste de ventas
7.939.000.000 US$
Beneficio bruto
4.669.000.000 US$
Gastos operativos
2.077.000.000 US$
Beneficio operativo
2.592.000.000 US$
Partidas no operativas e impuestos
-1.213.000.000 US$
Beneficio neto
1.379.000.000 US$
Resumen del balanceCómo se mantienen y financian los activos declarados en el período seleccionado.
StockMarketAgent.AI
Composición de activosFinanciado por
Activos totales106 mil M US$Efectivo8276 M US$Activos corrientes74,9 mil M US$Pasivos totales80 mil M US$Pasivos corrientes32,5 mil M US$Patrimonio neto26 mil M US$
Datos del desglose del balance
Activos totales
105.996.000.000 US$
Efectivo
8.276.000.000 US$
Activos corrientes
74.902.000.000 US$
Pasivos totales
79.989.000.000 US$
Pasivos corrientes
32.455.000.000 US$
Patrimonio neto
25.956.000.000 US$
Puente de flujo de cajaCómo el flujo de caja operativo se convirtió en flujo de caja libre en FY2025.
StockMarketAgent.AI
Conciliación del flujo operativo
Beneficio neto5027 M US$Depreciación y amortización+2229 M US$Compensación basada en acciones+151 M US$Otros ajustes operativos+52 M US$Flujo de caja operativo7459 M US$
Conciliación del efectivo inicial al final
Efectivo inicial7633 M US$Flujo de caja operativo+7459 M US$Flujo de inversión−2057 M US$Flujo de financiación−4579 M US$Efecto del tipo de cambio+77 M US$Efectivo final8533 M US$
7459 M US$ − 1360 M US$Flujo de caja libre 6099 M US$
Datos del puente de flujo de caja
Beneficio neto
5.027.000.000 US$
Entrada operativa
7.459.000.000 US$
Depreciación y amortización
2.229.000.000 US$
Compensación basada en acciones
151.000.000 US$
Otros ajustes operativos
52.000.000 US$
Flujo de caja operativo
7.459.000.000 US$
Efectivo disponible
15.169.000.000 US$
Efectivo inicial
7.633.000.000 US$
Efecto del tipo de cambio
77.000.000 US$
Salida de inversión
2.057.000.000 US$
Capex
1.360.000.000 US$
Otras actividades de inversión
697.000.000 US$
Salida de financiación
4.579.000.000 US$
Recompras de acciones
1.138.000.000 US$
Dividendos pagados
1.720.000.000 US$
Amortización neta de deuda
1.642.000.000 US$
Otras actividades de financiación
79.000.000 US$
Efectivo final
8.533.000.000 US$
Flujo de inversión
-2.057.000.000 US$
Flujo de financiación
-4.579.000.000 US$
Ingresos por categoría de negocioProporción de los ingresos totales de 2026-07-31.
12,6 mil MIngresos totales
Ingresos por categoría de negocioProporción
Cost of7939 M63 %
Otros4669 M37 %
Datos de composición de ingresos: Ingresos por categoría de negocio
Ingresos por categoría de negocio
Ingresos
Proporción
interanual
Cost of
7939 M
63 %
—
Other
4669 M
37 %
—
Ingresos por regiónProporción de los ingresos totales de 2025-11-02.
45,7 mil M US$Ingresos totales
Ingresos por regiónProporción
United States24 mil M US$52,5 %−20,7 % interanual
Western Europe6550 M US$14,3 %+5,8 % interanual
Latin America5607 M US$12,3 %+1,2 % interanual
Asia Africa Oceania And Middle East4243 M US$9,3 %−2,7 % interanual
Canada3735 M US$8,2 %−4,2 % interanual
Central Europe And Commonwealth Of Independent States1575 M US$3,4 %+5,8 % interanual
Fuente: SEC EDGAR · Presentado 2025-12-18 · SEC EDGAR
Datos de composición de ingresos: Ingresos por región
Ingresos por región
Ingresos
Proporción
interanual
United States
24 mil M US$
52,5 %
-20,7 %
Western Europe
6550 M US$
14,3 %
5,8 %
Latin America
5607 M US$
12,3 %
1,2 %
Asia Africa Oceania And Middle East
4243 M US$
9,3 %
-2,7 %
Canada
3735 M US$
8,2 %
-4,2 %
Central Europe And Commonwealth Of Independent States
1575 M US$
3,4 %
5,8 %
Ingresos y beneficiosCómo la escala del negocio se convierte en beneficio declarado.
Efectivo y deudaLiquidez disponible frente al endeudamiento total.
Generación de efectivoFlujo de caja operativo frente al flujo de caja libre.
RentabilidadEvolución de los márgenes bruto, operativo y neto.
Datos financieros puntuales utilizados en el análisis del 2026-09-21.
Datos del historial financiero
Período
Ingresos
EBITDA
Beneficio neto
Flujo de caja operativo
Flujo de caja libre
Capex
Depreciación y amortización
Compensación basada en acciones
Recompras de acciones
Dividendos pagados
Emisión neta de deuda
Flujo de inversión
Flujo de financiación
Efectivo inicial
Efectivo final
Efectivo e inversiones
Deuda total
Margen operativo
ROIC
WACC
Diferencial ROIC−WACC
2016-10-30
26,6 mil M US$
4547,5 M US$
1523,9 M US$
3769,7 M US$
3125,3 M US$
644,4 M US$
1559,8 M US$
70,6 M US$
205,4 M US$
761,3 M US$
—
-1177,2 M US$
-2405,9 M US$
—
4490 M US$
4789,3 M US$
35,6 mil M US$
9,8 %
—
3,6 %
—
2017-10-29
29,7 mil M US$
5769 M US$
2159 M US$
2196 M US$
1601 M US$
595 M US$
1716 M US$
68 M US$
6 M US$
764 M US$
—
-1662 M US$
4286 M US$
4490 M US$
9467 M US$
9786,5 M US$
44,2 mil M US$
12,0 %
—
4,2 %
—
2018-10-28
37,4 mil M US$
7202 M US$
2368 M US$
1822 M US$
926 M US$
896 M US$
1927 M US$
84 M US$
958 M US$
806 M US$
—
-8176 M US$
876 M US$
9467 M US$
4015 M US$
4394,1 M US$
46,2 mil M US$
12,0 %
—
4,7 %
—
2019-11-03
39,3 mil M US$
7573 M US$
3253 M US$
3412 M US$
2292 M US$
1120 M US$
2019 M US$
82 M US$
1253 M US$
943 M US$
—
-3924 M US$
509 M US$
4015 M US$
3956 M US$
4438 M US$
49,7 mil M US$
11,2 %
—
4,4 %
—
2020-11-01
35,5 mil M US$
7248 M US$
2751 M US$
7483 M US$
6663 M US$
820 M US$
2118 M US$
81 M US$
750 M US$
956 M US$
—
-3319 M US$
-980 M US$
3956 M US$
7172 M US$
7707 M US$
50,7 mil M US$
12,1 %
—
3,2 %
—
2021-10-31
44 mil M US$
10,6 mil M US$
5963 M US$
7726 M US$
6878 M US$
848 M US$
2050 M US$
82 M US$
2538 M US$
1040 M US$
—
-5750 M US$
-1078 M US$
7172 M US$
8125 M US$
8745 M US$
53 mil M US$
18,2 %
—
4,0 %
—
2022-10-30
52,6 mil M US$
12,1 mil M US$
7131 M US$
4699 M US$
3565 M US$
1134 M US$
1895 M US$
85 M US$
3597 M US$
1313 M US$
5765 M US$
-8485 M US$
826 M US$
8125 M US$
4941 M US$
5508 M US$
52,2 mil M US$
18,1 %
—
6,4 %
—
2023-10-29
61,3 mil M US$
17,5 mil M US$
10,2 mil M US$
8589 M US$
7091 M US$
1498 M US$
2004 M US$
130 M US$
7216 M US$
1427 M US$
11,5 mil M US$
-8749 M US$
2808 M US$
4941 M US$
7620 M US$
8404 M US$
63,7 mil M US$
21,2 %
—
6,9 %
—
2024-10-27
51,7 mil M US$
14,7 mil M US$
7100 M US$
9231 M US$
7591 M US$
1640 M US$
2118 M US$
208 M US$
4007 M US$
1605 M US$
3008 M US$
-6464 M US$
-2717 M US$
7620 M US$
7633 M US$
8478 M US$
65,5 mil M US$
17,5 %
—
6,4 %
—
2025-11-02
45,7 mil M US$
11,7 mil M US$
5027 M US$
7459 M US$
6099 M US$
1360 M US$
2229 M US$
151 M US$
1138 M US$
1720 M US$
-1642 M US$
-2057 M US$
-4579 M US$
7633 M US$
8533 M US$
9687 M US$
63,9 mil M US$
18,4 %
—
6,6 %
—
§9 Comparación de valoración con pares
Valor razonableReport-date price
Deere & CompanyDE
Precio / valor razonable
Valor razonable267,81 US$Report-date price684,73 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión56 / 100
Caterpillar Inc.CAT
Precio / valor razonable
Valor razonable297,04 US$Report-date price813,94 US$
Fecha de evaluación
Ventaja competitivaNone
Cuadro de mando de inversión51 / 100
The Boeing CompanyBA
Precio / valor razonable
Valor razonable134,94 US$Report-date price193,56 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión46 / 100
Deere & CompanyDE
Precio / valor razonable
Valor razonable267,81 US$Report-date price684,73 US$
Deere & Company (DE) trades at 29.2x forward earnings against a peer median of 24.8x. Its EV/EBITDA of 28.2x compares with a peer median of 22.5x. The comparison uses 4 peers: PACCAR Inc., Caterpillar Inc., The Boeing Company and Parker-Hannifin Corporation, as of 2026-09-21.
During cyclical expansion phases, rising agricultural crop prices elevate net farm income, prompting commercial agricultural producers to aggressively modernize equipment fleets. Elevated equipment order backlogs, robust pricing realization, and operating leverage drive substantial margin expansion and rapid return on capital compounding for equipment manufacturers.
Ciclo bajista
During cyclical contraction phases, falling crop commodity prices squeeze grower margins and cash flows, leading commercial farmers to defer capital expenditures and delay fleet replacements. Dealership inventories accumulate, factory production rates slow to match reduced retail takeaway, and fixed cost under-absorption compresses operating profitability across the machinery complex.
Tendencias seculares
Tendencia
Impacto
Nota
Precision Agriculture and Autonomous Equipment Adoption
positive
Farmers adopt telematics, automated guidance, and precision spraying/planting technologies to offset rising fertilizer and labor costs, delivering double-digit variable cost savings.
Dealer Territory Consolidation and Servicing Complexity
positive
Increasing mechanical and software complexity favors heavily capitalized dealership networks, reinforcing Deere's distribution against smaller competitors.
Posicionamiento
Deere is positioned at the top of the agricultural machinery hierarchy. Its dominant dealer footprint and connected fleet ecosystem allow it to capture premium pricing and sustain an 18.42% operating margin in FY2025, exceeding the industry operating margin benchmark of 16.10% and machinery peer PCAR at 12.02%. However, near-term inventory builds ahead of the industry expose it to cyclical destocking risks before the next upswing.2,3
§11 Gestión de posiciónEN
Tamaño de posición
0%
Given our Sell rating, Fair value of 267.81 USD compared to the market price of 684.73 USD as of 2026-09-21, and -60.89% upside, we recommend zero portfolio allocation (0%). The market valuation embeds an aggressive multi-year growth rebound that leaves no margin of safety against cyclical downcycle risks.2
Riesgo
Given the substantial valuation disconnect between Deere's market price of 684.73 USD as of 2026-09-21 and our Fair value of 267.81 USD, risk management centers on capital preservation. Investors should eliminate long exposure to avoid multiple compression risk as forward P/E of 29.24x normalizes toward historical and peer medians.
Tramos de entrada
Nivel
Acción
Por qué
At or below Fair value (267.81 USD)
Consider initiating disciplined accumulation only if cyclical demand stabilizes
Aligns market price with normalized mid-cycle valuation, providing adequate margin of safety.
Evaluate standard cyclical position sizing
Represents the low endpoint of our fair value range, pricing in a severe farm recession.
Tramos de salida
Nivel
Acción
Market price as of 2026-09-21 (684.73 USD)
Liquidate remaining long exposure immediately to lock in peak cyclical gains.
Deere trades at an extreme premium of 155.7% to our Fair value of 267.81 USD, offering zero margin of safety against cyclical earnings contraction.2
Growth Investor
Avoid
Consensus FY2026 revenue is projected to contract -7.29% while forward P/E sits elevated at 29.24x, far outstripping industrial peer growth and leaving no room for execution missteps.2
Income / Defensive Investor
Avoid
Although dividend payments are supported by resilient operating cash flow, capital depreciation risk from a multiple de-rating dwarfs the modest cash yield.5
§14 Recomendación finalEN
Acción
Vender
We recommend a Sell rating for Deere & Company as the market price of 684.73 USD as of 2026-09-21 stands 155.7% above our Fair value of 267.81 USD.2
While Deere maintains a solid narrow moat via telematics switching costs and its unmatched dealer network, peak multiple valuation leaves investors heavily exposed to multi-year agricultural equipment destocking risks.
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Sources
The records this analysis drew on, as they stood when it was run.
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Elevated tractor inventory builds and softer international demand force factory shutdowns and wholesale discounts, pulling operating margins below 11.0% towards historical trough levels (9.79% in 2016).3
FV impact
0%
Operating margin 3 points lower throughout
Trigger
Within 18 months
Multiple Derating on Cyclical Trough Deferral and Capital Cost Inflation
Market de-rates Deere from forward P/E of 29.24x towards peer PCAR's 15.88x or a trough 12.0x multiple as near-term EPS recovery fails to materialize.2
The bull scenario envisions an accelerated replacement cycle where grower adoption of autonomous machinery and precision telematics drives premium average selling prices and variable cost savings, while Construction & Forestry maintains robust sales momentum. This path requires rapid dealer channel destocking and expanded software attach rates. It would be disconfirmed if elevated interest rates continue to suppress agricultural capital spending into FY2027. Under these conditions, the valuation approaches Potential value of $330.41 with a likelihood of 15.0%, representing a return of -51.7% relative to $684.73.3
ActualOperating margins compressed as lower shipment volumes and dealer inventory builds weighed on capacity utilization.
Por qué importa
Measures factory fixed cost absorption and wholesale pricing realization against dealer promotional discounting, dictating cash flow generation and intrinsic earnings power.
03
Métrica:
Dealer Channel Inventory Cadence
ActualDealer tractor inventory built ahead of the industry exiting the third quarter, requiring disciplined production scheduling.
Por qué importa
Excess channel inventories force factory shutdowns and promotional discounts, while disciplined channel clearing protects equipment residual values and gross margin integrity.
04
Métrica:
Precision Technology Monetization and Adoption
ActualPrecision solutions continue to deliver variable operating cost savings for growers, driving adoption despite broader crop commodity price headwinds.
Por qué importa
Higher software attach rates and digital telematics integration expand recurring revenue streams, reducing cyclical earnings volatility and reinforcing customer switching costs.
05
Métrica:
Construction & Forestry Sales Momentum and Pricing Realization
ActualSegment order books remain full with positive pricing realization supporting narrowed full-year margin guidance.
Por qué importa
Earthmoving and roadbuilding demand diversification cushions ag equipment downturns, providing margin support when agricultural volumes contract.
Global Agricultural Trade Shifts and Input Cost Volatility
negative
Fluctuations in fertilizer expenses and shifting global grain trade flows create persistent farm income uncertainty in international markets like Latin America and Europe.
