Despite a weak farm income forecast marring the near-term outlook of the Zacks Manufacturing - Farm Equipment industry, it is expected to benefit from rising agricultural equipment demand driven by the food needs of a growing global population.

Deere & Company (DE Quick QuoteDE - Free Report) , CNH Industrial (CNH Quick QuoteCNH - Free Report) , AGCO Corporation (AGCO Quick QuoteAGCO - Free Report) and Alamo Group (ALG Quick QuoteALG - Free Report) are well-positioned to capitalize on this trend through continued product expansion and innovation. The industry is also gaining from rapid advancements in precision agriculture, automation and smart farming technologies, as companies invest heavily in digital solutions that make farming more efficient, accurate and easier to manage across the production cycle.

About the Industry

The Zacks Manufacturing - Farm Equipment industry comprises companies that manufacture agricultural equipment. These equipment include tractors, combines, cotton pickers and harvesting equipment; tillage, seeding and application equipment, consisting of sprayers, nutrient management and soil preparation machinery; and hay and forage equipment, comprising self-propelled forage harvesters and attachments, balers and mowers. Some companies in the industry produce turf and utility equipment, consisting of riding lawn equipment and walk-behind mowers, golf course equipment, utility vehicles, commercial mowing equipment, and garden tillers and snow throwers. Some participants manufacture irrigation equipment. Deere, Kubota and CNH Industrial are presently the top three global manufacturers of agricultural equipment (in that order).

Trends Shaping the Future of the Manufacturing - Farm Equipment Industry

Low Farm Income Likely to Weigh on the Industry:  The U.S. Department of Agriculture (USDA) forecasts a 0.7% year-over-year dip in net farm income to $153.4 billion for 2026. On an inflation-adjusted basis, net farm income is expected to fall 2.6%. Total crop receipts are forecast to inch up 1.2% to $240.8 billion in 2026. While receipts for corn and hay are expected to increase, they are expected to be offset partly by declines in wheat and rice receipts. Adjusted for inflation, total crop receipts are anticipated to slip 0.7%.  Meanwhile, total animal/animal product receipts are projected to fall 5.8% to $273.9 billion in 2026. Direct government farm payments are expected to increase sharply to $44.3 billion, up $13.8 billion from 2025, mainly driven by higher commodity-related payments and supplemental disaster assistance for farmers and ranchers. Total production expenses, including those associated with operator dwellings, are expected to rise 1% to $477.7 billion in 2026. Livestock and poultry purchases, feed, and labor are likely to remain the largest expense categories. Spending on livestock and poultry purchases is projected to record the steepest increase, rising 9.7%, while feed expenses are expected to decline 6.8% in 2026. The anticipated decline in farm income remains a key concern, as weaker earnings could dampen farmers’ purchasing power and delay equipment and input spending, creating headwinds for the farm equipment industry.

Demand for Food to Fuel the Industry: Despite the ongoing volatility in commodity prices and lower crop receipts, agricultural equipment demand will continue to be supported by increased global demand for food, stemming from population growth and an increasing proportion of the population aspiring for better living standards. With farm sizes increasing, there is a greater need for labor, but escalating labor costs are prompting farmers to turn to mechanization. Additionally, subsidies on agricultural machinery purchases are enabling even small-scale farmers to invest in equipment.

Pricing, Cost-Cutting Actions to Boost Margins: The industry has not been immune to the rampant cost inflation prevailing in the sector. Constraints on the availability of raw materials, labor and trucking resources have led to higher lead times for deliveries. However, the industry players have recently been reporting improvements in the supply chain. The companies have been implementing pricing and cost-reduction actions, which are likely to help sustain margins.

Technologically Advanced Machinery Gaining Popularity: Customers are increasingly relying on advanced technology, smart farming solutions and mechanization to run their operations. Thus, the industry participants are enhancing investments in launching products equipped with advanced technologies and features to keep up with customers' evolving demands. Precision agriculture technology is expected to be a key catalyst, as it enables farmers to increase yield with reduced input costs and sustainability benefits.

Zacks Industry Rank Indicates Dull Prospects

The Zacks Manufacturing - Farm Equipment industry is part of the broader Zacks Industrial Products sector. The industry currently carries a Zacks Industry Rank #200, which places it at the bottom 18% of 245 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dim prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Despite the bleak near-term prospects of the industry, we will present a few Manufacturing - Farm Equipment stocks that can be retained in one’s portfolio. It is worth taking a look at the industry’s stock-market performance and valuation picture before that.

 

Industry Underperforms Sector and S&P 500

The Zacks Manufacturing - Farm Equipment industry has underperformed its sector and the Zacks S&P 500 composite over the past 12 months. Stocks in this industry have gained 14.1% in the past 12 months compared with the S&P 500’s growth of 31.7%. The Industrial Products sector has risen 27.7% in the said time frame.

One-Year Price Performance

Industry's Current Valuation

On the basis of the trailing EV/EBITDA ratio, which is a commonly used multiple for valuing farm equipment stocks, we see that the industry is currently trading at 30.4X compared with the S&P 500’s 18.47X. The Industrial Products sector’s forward 12-month EV/EBITDA is 19.97X. This is shown in the charts below.

Enterprise Value/EBITDA (EV/EBITDA) Ratio (F12M)

Enterprise Value/EBITDA (EV/EBITDA) Ratio (F12M)

Over the last five years, the industry traded as high as 32.79X and as low as 14.15X, the median being 19.78X.

4 Manufacturing - Farm Equipment Stocks to Keep an Eye on

Deere: The company will continue to benefit from its strong focus on launching technologically advanced products and feature-rich solutions that strengthen its competitive positioning. Expansion in precision agriculture remains a key growth catalyst, while replacement demand driven by the need to upgrade aging equipment should continue to support revenues. Deere’s exposure to the construction equipment market also positions it well to benefit from infrastructure spending, healthy rental activity and robust demand from projects such as data centers. Optimizing its cost structure through efficiency initiatives and footprint adjustments, while leveraging pricing actions and its Smart Industrial strategy to offset input cost pressures over time, is also a smart move. Deere’s recent acquisition of construction technology company Tenna is aimed at scaling its business through Tenna’s customer-centric mixed-fleet model. Deere recently acquired construction technology company Tenna with the aim of scaling and growing the Construction & Forestry business using the latter's customer-focused mixed-fleet model. Tenna’s platform offers contractors near real-time visibility into equipment operations, enabling better tracking of equipment trends, maintenance needs, planning and job-site coordination, ultimately improving productivity and reducing costs. Deere’s recent acquisition of the intellectual property and assets of Finland’s Risutec Oy will help expand its silviculture strategy and commitment to sustainable reforestation.

The Zacks Consensus Estimate for the Moline, IL-based company’s fiscal 2026 earnings has moved up 0.2% over the past 90 days. Deere has a trailing four-quarter earnings surprise of around 11.25%, on average. The company currently has an estimated long-term earnings growth rate of 15.9% and carries a Zacks Rank #3 (Hold). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price & Consensus: DE

CNH Industrial: The company is accelerating investments in automation, autonomy, digital technologies, alternative fuels and electrification to strengthen its footprint in the Precision Technology market. CNH has enhanced its FieldOps platform with new capabilities and continues to expand its feature set. It has also partnered to launch the FLEETPRO line of aftermarket kits in the EMEA region and integrated advanced Raven technology into newer machines for full connectivity with FieldOps. These initiatives support its target of nearly doubling precision technology components in agricultural sales to 10% by 2030. At the same time, CNH aims to reinforce its leadership across the agricultural cycle through new product launches, feature upgrades and portfolio enhancements spanning tractors, harvesters and crop production and protection equipment. Its ongoing operational efficiency initiatives are also expected to drive continued margin expansion.

The Zacks Consensus Estimate for CNH Industrial’s fiscal 2026 earnings has moved up 5% over the past 60 days.  CNH has a trailing four-quarter earnings surprise of around 10.1%, on average. The Basildon, UK-based company currently has an estimated long-term earnings growth rate of 18% and carries a Zacks Rank of 3.

Price & Consensus: CNH

AGCO: Backed by its differentiated portfolio and “Farmer First” approach, the company outperformed the broader market in the first quarter of 2026, driven by strong demand for high-horsepower equipment and precision agriculture solutions. AGCO continues to invest in new products, precision farming technologies and smart farming solutions to strengthen its distribution network, expand digital capabilities and enhance its product offerings. At the same time, the company is streamlining and sharpening its portfolio of agricultural machinery and precision ag technology solutions while maintaining disciplined investments in technology and organic growth initiatives. AGCO is also focused on debt reduction and enhancing shareholder returns, recently raising its quarterly dividend by 3%. Supported by its Farmer First strategy, strong innovation pipeline and ongoing cost discipline, the company remains well positioned to generate healthy cash flows going forward.

AGCO has an estimated long-term earnings growth rate of 24.9%. The consensus estimate for AGCO’s 2026 earnings has moved up 2% in the past 60 days. The estimate suggests year-over-year growth of 11.6%. It has a trailing four-quarter earnings surprise of 41.4%, on average. This Duluth, GA-based company currently carries a Zacks Rank of 3.

Price & Consensus: AGCO

Alamo: Supported by robust operating cash flows and solid liquidity, the company has been steadily investing in organic growth initiatives as well as strategic acquisitions. Its acquisition strategy focuses on profitable businesses with innovative, market-leading product portfolios that serve stable and steadily growing end markets. In line with this approach, it acquired Petersen Industries, a manufacturer of specialized truck-mounted grapple loader equipment for municipal and industrial customers. The Industrial Equipment Division’s growth in the first quarter of 2026 was primarily driven by the successful integration of the Petersen and Ring-O-Matic acquisitions. The Vegetation Management achieved its first quarterly year-over-year sales increase in nine quarters in the first quarter of 2026, signaling a potential stabilization in previously declining end markets. The company anticipates continued margin progression throughout 2026, driven by manufacturing efficiencies and new product innovation, including the commercial launch of the hybrid mechanical sweeper in the second half of the year.

The Zacks Consensus Estimate for the Seguin, TX-based company’s fiscal 2026 earnings has moved up 5.6% in 60 days’ time and implies year-over-year growth of 13.2%. ALG currently carries a Zacks Rank of 3 and has a long-term estimated earnings growth rate of 16%.

Price & Consensus: ALG