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Deere Share Price Gains 13% YTD: Buy, Sell or Hold the Stock?
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Key Takeaways
Deere shares have gained 13% YTD, outpacing its industry, sector and the S&P 500.
DE's Q3 sales decreased 9% and earnings per share declined 24% year over year.
Deere cut its FY25 net income outlook to $4.75-$5.25B, well below last year's $7.1B.
Deere & Company (DE - Free Report) shares have gained 12.8% year to date, outperforming the Zacks Manufacturing - Farm Equipment industry’s 11.5% growth. In contrast, the broader Zacks Industrial Products sector has gained 6.7% and the S&P 500 gained 9.9%.
DE Stock's YTD Price Performance vs. Industry, Sector & S&P 500
Image Source: Zacks Investment Research
Meanwhile, Deere’s peers, such as CNH Industrial N.V. (CNH - Free Report) , declined 1.4% in the same timeframe, while AGCO Corporation (AGCO - Free Report) moved up 14.1%.
DE Stock's YTD Price Performance vs. CNH & AGCO
Image Source: Zacks Investment Research
With this outperformance, investors may rush to add the stock to their portfolio. However, it would be prudent to evaluate the stock’s growth prospects as well as associated risks first to arrive at a well-informed choice.
Weak Demand Continues to Hurt DE’s Top and Bottom Lines
DE has seen a downtrend in sales in the past eight quarters, with earnings declining in seven consecutive quarters. This dismal performance was attributed to lower shipment volumes across all segments amid sluggish demand. The company has been reducing production volumes and managing inventory in response to these challenging market conditions.
In third-quarter fiscal 2025 results (ended July 28, 2025), Deere’s Agricultural and Turf equipment sales moved down 10.5% year over year, with volumes falling 9.6%. Farmer spending has been muted amid low commodity prices and tariff uncertainty. DE’s Construction and Forestry segment also reported a year-over-year decline of 5.4% in sales, with volumes down 0.5%.
Deere’s net sales of equipment operations (comprising Agriculture, and Turf, Construction and Forestry) came in at $10.36 billion, down 9% year over year. Total net sales (including financial services and others) were $12.02 billion, marking an 8.6% decline year over year. Earnings plunged 24% year over year to $4.75 per share.
Other players in the industry are bearing the brunt, too. CNH Industrial reported a 55% year-over-year plunge in adjusted earnings per share to 17 cents in the second quarter of fiscal 2025. CNH Industrial’s net sales declined nearly 14% to $4.71 billion.
AGCO reported a 47% year-over-year plunge in adjusted earnings per share to $1.35, with net sales down 18.8% year over year to $2.36 billion.
Low Crop Prices Remain Challenging for Deere
The U.S. Department of Agriculture forecasts a 29.5% year-over-year increase in net farm income to $180.1 billion for 2025. This suggests an improvement from the 19% and 6% declines in net farm income witnessed in 2023 and 2024. However, the rebound this year will mainly reflect an increase in direct government farm payments of around $33.1 billion. Meanwhile, total crop receipts are forecast to decrease 2.3% from the 2024 level due to lower soybean and corn prices. This could weigh on the demand for farming equipment.
DE Lowers FY25 View, Triggers Downward Estimate Revisions
DE anticipates net sales for Production and Precision Agriculture to decline 15-20% year over year in fiscal 2025. Sales of Small Agriculture and Turf are expected to drop 10% and Construction and Forestry sales are projected to move down 10-15%.
Deere currently expects net income between $4.75 billion and $5.25 billion for fiscal 2025. The company has lowered its guidance twice this fiscal year. Notably, the guidance at the beginning of fiscal 2025 was $5-$5.5 billion.
The projected range is way lower than the $7.1 billion reported in fiscal 2024. Deere also estimates the pretax impact of tariffs for fiscal 2025 to be around $600 million.
Analysts seem to be losing confidence in DE stock, as evident from the downward earnings estimate activity for both fiscal 2025 and 2026, as shown in the chart below.
Image Source: Zacks Investment Research
The consensus estimate for fiscal 2025 earnings indicates a year-over-year decline of 27.32%. However, the estimate for fiscal 2026 paints a better picture, implying year-over-year growth of 12.1%.
Image Source: Zacks Investment Research
DE Stock Seems Overvalued
Deere is currently trading at a forward 12-month Price/Earnings of 23.33X, a 9% premium to the industry’s 21.43X. It is also higher than DE’s five-year median of 15.83X. The company’s Value Score of D suggests that the stock is not so cheap and a stretched valuation at this moment.
Image Source: Zacks Investment Research
Meanwhile, CNH Industrial and AGCO are trading lower at 15.44X and 22.62X, respectively.
Factors Supporting Deere’s Long-Term Story
Although current conditions appear unfavorable, rising global food demand, driven by population growth and improving living standards, is expected to sustain long-term demand for agricultural equipment. As farm sizes increase, labor needs will rise. However, escalating labor costs are driving farmers to turn to mechanization. Deere has remained committed to introducing technologically advanced products that align with customers’ changing requirements. Focus on precision agriculture is also expected to be a catalyst. Meanwhile, demand for the company’s construction equipment is likely to benefit from higher infrastructure spending.
Buy, Sell or Hold DE Stock?
Weak demand in both the agriculture and construction sectors continues to weigh on DE’s near-term performance. Its lofty valuation, coupled with the expected declines in both top and bottom lines this fiscal and the downward trend in earnings estimates, makes it less appealing at present. It is wise to steer clear of the stock now. Deere currently carries a Zacks Rank #4 (Sell).
Image: Bigstock
Deere Share Price Gains 13% YTD: Buy, Sell or Hold the Stock?
Key Takeaways
Deere & Company (DE - Free Report) shares have gained 12.8% year to date, outperforming the Zacks Manufacturing - Farm Equipment industry’s 11.5% growth. In contrast, the broader Zacks Industrial Products sector has gained 6.7% and the S&P 500 gained 9.9%.
DE Stock's YTD Price Performance vs. Industry, Sector & S&P 500
Image Source: Zacks Investment Research
Meanwhile, Deere’s peers, such as CNH Industrial N.V. (CNH - Free Report) , declined 1.4% in the same timeframe, while AGCO Corporation (AGCO - Free Report) moved up 14.1%.
DE Stock's YTD Price Performance vs. CNH & AGCO
Image Source: Zacks Investment Research
With this outperformance, investors may rush to add the stock to their portfolio. However, it would be prudent to evaluate the stock’s growth prospects as well as associated risks first to arrive at a well-informed choice.
Weak Demand Continues to Hurt DE’s Top and Bottom Lines
DE has seen a downtrend in sales in the past eight quarters, with earnings declining in seven consecutive quarters. This dismal performance was attributed to lower shipment volumes across all segments amid sluggish demand. The company has been reducing production volumes and managing inventory in response to these challenging market conditions.
In third-quarter fiscal 2025 results (ended July 28, 2025), Deere’s Agricultural and Turf equipment sales moved down 10.5% year over year, with volumes falling 9.6%. Farmer spending has been muted amid low commodity prices and tariff uncertainty. DE’s Construction and Forestry segment also reported a year-over-year decline of 5.4% in sales, with volumes down 0.5%.
Deere’s net sales of equipment operations (comprising Agriculture, and Turf, Construction and Forestry) came in at $10.36 billion, down 9% year over year. Total net sales (including financial services and others) were $12.02 billion, marking an 8.6% decline year over year. Earnings plunged 24% year over year to $4.75 per share.
Other players in the industry are bearing the brunt, too. CNH Industrial reported a 55% year-over-year plunge in adjusted earnings per share to 17 cents in the second quarter of fiscal 2025. CNH Industrial’s net sales declined nearly 14% to $4.71 billion.
AGCO reported a 47% year-over-year plunge in adjusted earnings per share to $1.35, with net sales down 18.8% year over year to $2.36 billion.
Low Crop Prices Remain Challenging for Deere
The U.S. Department of Agriculture forecasts a 29.5% year-over-year increase in net farm income to $180.1 billion for 2025. This suggests an improvement from the 19% and 6% declines in net farm income witnessed in 2023 and 2024. However, the rebound this year will mainly reflect an increase in direct government farm payments of around $33.1 billion. Meanwhile, total crop receipts are forecast to decrease 2.3% from the 2024 level due to lower soybean and corn prices. This could weigh on the demand for farming equipment.
DE Lowers FY25 View, Triggers Downward Estimate Revisions
DE anticipates net sales for Production and Precision Agriculture to decline 15-20% year over year in fiscal 2025. Sales of Small Agriculture and Turf are expected to drop 10% and Construction and Forestry sales are projected to move down 10-15%.
Deere currently expects net income between $4.75 billion and $5.25 billion for fiscal 2025. The company has lowered its guidance twice this fiscal year. Notably, the guidance at the beginning of fiscal 2025 was $5-$5.5 billion.
The projected range is way lower than the $7.1 billion reported in fiscal 2024. Deere also estimates the pretax impact of tariffs for fiscal 2025 to be around $600 million.
Analysts seem to be losing confidence in DE stock, as evident from the downward earnings estimate activity for both fiscal 2025 and 2026, as shown in the chart below.
The consensus estimate for fiscal 2025 earnings indicates a year-over-year decline of 27.32%. However, the estimate for fiscal 2026 paints a better picture, implying year-over-year growth of 12.1%.
Image Source: Zacks Investment Research
DE Stock Seems Overvalued
Deere is currently trading at a forward 12-month Price/Earnings of 23.33X, a 9% premium to the industry’s 21.43X. It is also higher than DE’s five-year median of 15.83X. The company’s Value Score of D suggests that the stock is not so cheap and a stretched valuation at this moment.
Image Source: Zacks Investment Research
Meanwhile, CNH Industrial and AGCO are trading lower at 15.44X and 22.62X, respectively.
Factors Supporting Deere’s Long-Term Story
Although current conditions appear unfavorable, rising global food demand, driven by population growth and improving living standards, is expected to sustain long-term demand for agricultural equipment. As farm sizes increase, labor needs will rise. However, escalating labor costs are driving farmers to turn to mechanization. Deere has remained committed to introducing technologically advanced products that align with customers’ changing requirements. Focus on precision agriculture is also expected to be a catalyst. Meanwhile, demand for the company’s construction equipment is likely to benefit from higher infrastructure spending.
Buy, Sell or Hold DE Stock?
Weak demand in both the agriculture and construction sectors continues to weigh on DE’s near-term performance. Its lofty valuation, coupled with the expected declines in both top and bottom lines this fiscal and the downward trend in earnings estimates, makes it less appealing at present. It is wise to steer clear of the stock now. Deere currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.