MW Deere's outlook disappoints, as it means the agriculture sector hasn't bottomed yet

By Tomi Kilgore

Stock drops as fourth-quarter results beat expectations but the full-year outlook points to further weakness, as tariffs remain a problem

Deere's stock falls as the full-year outlook suggests the worst of the agriculture cycle isn't over yet.

Shares of Deere & Co. dropped in early trading Wednesday after the maker of agricultural and construction equipment's outlook for the coming year indicates that the worst of its business hasn't been seen yet.

While the company (DE) beat fiscal fourth-quarter earnings, which were less than feared from a year ago, the fiscal 2026 outlook calls for net income to fall more than forecast, toward a six-year low.

Chief Executive John May said profitability will continue to be pressured by tariffs and "persistent challenges" in the large agriculture sector. But there are green shoots, as the agriculture and turf, and construction and forestry sectors are expected to see growth. He said 2026 "will mark the bottom of the large ag cycle."

Still, fiscal 2026 net income is forecast to decline to $4 billion to $4.75 billion from the $5.03 billion reported in fiscal 2025, which ended Nov. 2. The outlook came as a surprise to Wall Street, as analysts surveyed by FactSet were expecting, on average, net income to increase to $5.11 billion.

And for the production and precision ag business, which includes the large ag equipment and advanced agricultural tools and technologies, Deere expects sales for the coming year to decline 5% to 10%. But the current FactSet consensus, for sales in the business of $17.56 billion, implies 1.4% growth.

The stock fell 5.4% in premarket trading, a day after closing at a three-month high. It had rallied 5.1% over the past five sessions in anticipation of upbeat earnings.

There are bright spots, however, as sales for both the small ag and turf and construction and forestry businesses are expected to be up about 10%, while the FactSet consensus implies growth of 2.2% and 4.3%, respectively.

And for the fourth quarter to Nov. 2, net income fell 14.5% from a year ago to $1.07 billion, but earnings per share of $3.93 topped the FactSet consensus of $3.84. That marked the 13th straight quarter of bottom-line beats.

Total revenue grew 11.2% to $12.39 billion, above expectations of $11.75 billion.

Production and precision ag sales increased 10.1% to $4.74 billion, above the FactSet consensus of $4.55 billion, boosted by higher shipment volumes and prices. Small ag and turf sales rose 6.5% to $2.46 billion, while construction and forestry sales jumped 27% to $3.38 billion. Both exceeded analyst estimates.

Deere shares have rallied 17.6% in 2025 through Tuesday, while the S&P 500 index SPX has advanced 15%.

-Tomi Kilgore

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November 26, 2025 07:31 ET (12:31 GMT)

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