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DE Q2 Earnings Call Highlights Steady 2026 Outlook
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Key Takeaways
DE topped Q2 estimates with $1.773B net income on $11.78B sales, but large ag stayed pressured
DE booked a $272M IEEPA tariff refund, yet still expects about $900M of tariff costs this year
DE says 2026 is the ag-cycle bottom; N.A. high-hp tractor/combine inventories down 50% from mid-2024 peaks
Deere & Company (DE - Free Report) used its second-quarter call to argue that portfolio balance, not a turn in large agriculture, is carrying the year. Management kept full-year net income guidance intact even as Brazil weakened and tariffs remained a material drag.
That steadiness mattered because the call centered less on the quarter’s headline beat and more on what executives said about demand, pricing, inventories and the path into 2027.
DE Keeps Net Income Guide Intact
DE reported second-quarter net income of $1.773 billion, or $6.55 a share, on net sales of $11.78 billion. That topped the Zacks Consensus Estimate of $5.81 for earnings and $11.44 billion for revenues, producing surprise percentages of 12.74% and 2.98%, respectively.
Management did not frame the quarter as a broad-based acceleration. Instead, executives emphasized that the company is operating through different cycle positions across its businesses, with large agriculture still under pressure, while Small Ag & Turf and Construction & Forestry supported the enterprise.
Director of Investor Relations Christopher Seibert said equipment operations margin reached 16.9%, while management kept fiscal 2026 net income guidance at $4.5 billion to $5.0 billion. That unchanged outlook was a central message throughout the call.
Deere Sees Different Cycles Across Units
CFO Brent Norwood said large agriculture is running below trough levels, Small Ag & Turf is moving toward mid-cycle and Construction & Forestry is slightly above mid-cycle. That framing helped explain why Deere kept stressing resilience rather than recovery.
Production & Precision Agriculture remained the weak point. Segment sales fell 14% to $4.503 billion and operating margin compressed to 15.7% from 22.0% a year ago, reflecting lower shipment volumes and higher production costs.
The offset came from the other segments. Small Ag & Turf posted 16% sales growth and a 20.6% operating margin, while Construction & Forestry delivered 29% sales growth and a 14.8% operating margin. Management repeatedly pointed to diversification as the reason the company can absorb ongoing agricultural softness.
DE Faces Same Tariff Burden After Refund
A major swing factor in the quarter was a $272 million recovery tied to IEEPA tariff refund claims accepted by U.S. Customs and Border Protection. Josh Beal, director of investor relations, said that lifted equipment margins by nearly 2.5 points in the quarter.
Even so, management said the full-year direct tariff exposure is effectively unchanged at about $1.2 billion, or roughly a 3% margin headwind. Net of the refund, the company now expects about $900 million of tariff costs for the year.
Norwood’s tone on pricing was disciplined rather than aggressive. He said DE is not using tariff surcharges and expects implied equipment price realization of 1.5% to 2% for the year, in line with general inflation excluding tariffs. The mitigation plan centers on sourcing changes, exemptions, compliance work and cost actions.
Deere Gets More Constructive on Demand
Deere raised its Construction & Forestry sales outlook to about 20% growth for fiscal 2026 and lifted that segment’s operating margin range to 10% to 12%. Norwood said order books in the United States and Canada are up more than 60% since November, with more than 80% of production slots filled.
Management tied that strength to infrastructure spending, rental fleet replacement, data center projects and roadbuilding demand. The company also said nearly all production slots for its new Deere-designed excavator are already spoken for.
Agriculture was more mixed. Seibert said the South American tractor and combine market is now expected to decline about 15%, versus the prior down 5% view, because Brazil is facing higher input costs, high interest rates and a stronger real. Outside South America, agriculture guides were largely unchanged.
DE Q&A Focuses on Inventory and 2027
Analyst questions repeatedly tested whether the company is truly at the bottom of the ag cycle. In response, management sounded measured but consistent, saying fiscal 2026 still represents the bottom and that some recovery is expected in 2027.
Beal backed that view with inventory data. North American new inventories for high-horsepower tractors and combines are down more than 50% from mid-2024 peaks, while used combine and used tractor inventories are down by the mid-teens from peak levels.
Questions from Jefferies, Morgan Stanley and Raymond James also pressed on pricing and farmer behavior. Management acknowledged pressure from fertilizer and other inputs, especially in Brazil, but said dealer feedback and improving used inventory conditions support the company’s baseline recovery view for next year.
Deere Leans on Tech and Discipline
Another theme was through-cycle investment. Management highlighted new 8R and 8RX tractor models, ExactShot and FurrowVision planting tools, and broader crop coverage for See & Spray as evidence that Deere is still investing heavily despite the ag downturn.
Executives also pointed to digital adoption. DE said engaged acres in Operations Center rose about 10% year over year, monthly active digital users reached nearly 440,000 and more than 12,500 JDLink Boost kits have been sold since the Starlink-based connectivity launch.
Capital allocation remained active as well. Norwood said the company returned $635 million to shareholders in the quarter through buybacks and dividends, while maintaining a posture centered on execution, investment and balance-sheet flexibility.
Zacks Rank and Style Signals
DE carries a Zacks Rank #3 (Hold) with a Value Score of D, Growth Score of D, Momentum Score of B and VGM Score of D. A Zacks Rank #3 points to a more neutral near-term earnings revision profile than the stronger #1 or #2 ranks. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Style Scores add a mixed overlay. Momentum stands out as the strongest factor, while the weaker Value, Growth and VGM scores imply a less favorable setup on those measures. Under the Zacks framework, stronger combinations usually come from stocks with a Zacks Rank #1 or #2 and Style Scores of A or B. The rank can also change as estimate revisions adjust after the latest results.
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DE Q2 Earnings Call Highlights Steady 2026 Outlook
Key Takeaways
Deere & Company (DE - Free Report) used its second-quarter call to argue that portfolio balance, not a turn in large agriculture, is carrying the year. Management kept full-year net income guidance intact even as Brazil weakened and tariffs remained a material drag.
That steadiness mattered because the call centered less on the quarter’s headline beat and more on what executives said about demand, pricing, inventories and the path into 2027.
DE Keeps Net Income Guide Intact
DE reported second-quarter net income of $1.773 billion, or $6.55 a share, on net sales of $11.78 billion. That topped the Zacks Consensus Estimate of $5.81 for earnings and $11.44 billion for revenues, producing surprise percentages of 12.74% and 2.98%, respectively.
Deere & Company Price, Consensus and EPS Surprise
Deere & Company price-consensus-eps-surprise-chart | Deere & Company Quote
Management did not frame the quarter as a broad-based acceleration. Instead, executives emphasized that the company is operating through different cycle positions across its businesses, with large agriculture still under pressure, while Small Ag & Turf and Construction & Forestry supported the enterprise.
Director of Investor Relations Christopher Seibert said equipment operations margin reached 16.9%, while management kept fiscal 2026 net income guidance at $4.5 billion to $5.0 billion. That unchanged outlook was a central message throughout the call.
Deere Sees Different Cycles Across Units
CFO Brent Norwood said large agriculture is running below trough levels, Small Ag & Turf is moving toward mid-cycle and Construction & Forestry is slightly above mid-cycle. That framing helped explain why Deere kept stressing resilience rather than recovery.
Production & Precision Agriculture remained the weak point. Segment sales fell 14% to $4.503 billion and operating margin compressed to 15.7% from 22.0% a year ago, reflecting lower shipment volumes and higher production costs.
The offset came from the other segments. Small Ag & Turf posted 16% sales growth and a 20.6% operating margin, while Construction & Forestry delivered 29% sales growth and a 14.8% operating margin. Management repeatedly pointed to diversification as the reason the company can absorb ongoing agricultural softness.
DE Faces Same Tariff Burden After Refund
A major swing factor in the quarter was a $272 million recovery tied to IEEPA tariff refund claims accepted by U.S. Customs and Border Protection. Josh Beal, director of investor relations, said that lifted equipment margins by nearly 2.5 points in the quarter.
Even so, management said the full-year direct tariff exposure is effectively unchanged at about $1.2 billion, or roughly a 3% margin headwind. Net of the refund, the company now expects about $900 million of tariff costs for the year.
Norwood’s tone on pricing was disciplined rather than aggressive. He said DE is not using tariff surcharges and expects implied equipment price realization of 1.5% to 2% for the year, in line with general inflation excluding tariffs. The mitigation plan centers on sourcing changes, exemptions, compliance work and cost actions.
Deere Gets More Constructive on Demand
Deere raised its Construction & Forestry sales outlook to about 20% growth for fiscal 2026 and lifted that segment’s operating margin range to 10% to 12%. Norwood said order books in the United States and Canada are up more than 60% since November, with more than 80% of production slots filled.
Management tied that strength to infrastructure spending, rental fleet replacement, data center projects and roadbuilding demand. The company also said nearly all production slots for its new Deere-designed excavator are already spoken for.
Agriculture was more mixed. Seibert said the South American tractor and combine market is now expected to decline about 15%, versus the prior down 5% view, because Brazil is facing higher input costs, high interest rates and a stronger real. Outside South America, agriculture guides were largely unchanged.
DE Q&A Focuses on Inventory and 2027
Analyst questions repeatedly tested whether the company is truly at the bottom of the ag cycle. In response, management sounded measured but consistent, saying fiscal 2026 still represents the bottom and that some recovery is expected in 2027.
Beal backed that view with inventory data. North American new inventories for high-horsepower tractors and combines are down more than 50% from mid-2024 peaks, while used combine and used tractor inventories are down by the mid-teens from peak levels.
Questions from Jefferies, Morgan Stanley and Raymond James also pressed on pricing and farmer behavior. Management acknowledged pressure from fertilizer and other inputs, especially in Brazil, but said dealer feedback and improving used inventory conditions support the company’s baseline recovery view for next year.
Deere Leans on Tech and Discipline
Another theme was through-cycle investment. Management highlighted new 8R and 8RX tractor models, ExactShot and FurrowVision planting tools, and broader crop coverage for See & Spray as evidence that Deere is still investing heavily despite the ag downturn.
Executives also pointed to digital adoption. DE said engaged acres in Operations Center rose about 10% year over year, monthly active digital users reached nearly 440,000 and more than 12,500 JDLink Boost kits have been sold since the Starlink-based connectivity launch.
Capital allocation remained active as well. Norwood said the company returned $635 million to shareholders in the quarter through buybacks and dividends, while maintaining a posture centered on execution, investment and balance-sheet flexibility.
Zacks Rank and Style Signals
DE carries a Zacks Rank #3 (Hold) with a Value Score of D, Growth Score of D, Momentum Score of B and VGM Score of D. A Zacks Rank #3 points to a more neutral near-term earnings revision profile than the stronger #1 or #2 ranks. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Style Scores add a mixed overlay. Momentum stands out as the strongest factor, while the weaker Value, Growth and VGM scores imply a less favorable setup on those measures. Under the Zacks framework, stronger combinations usually come from stocks with a Zacks Rank #1 or #2 and Style Scores of A or B. The rank can also change as estimate revisions adjust after the latest results.