Deere Stock Surges On Earnings As Ag Cycle Bottoms

Deere (DE) earnings mowed down estimates for the fiscal first quarter, though still fell sharply from a year ago. The company boosted its 2026 outlook despite predicting another down year for sales of big agricultural machinery. But DE stock revved higher early Thursday, building on its breakout in early February.

“While the global large agriculture industry continues to experience challenges, we’re encouraged by the ongoing recovery in demand within both the construction and small agriculture segments,” CEO John May said in the earnings statement. “These positive developments reinforce our belief that 2026 represents the bottom of the current cycle.”

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Deere Earnings

Results: Deere posted Q1 earnings per share of $2.42, down 24% from a year ago but 32 cents ahead of forecasts. Net sales grew 17.5% to $8.001 billion vs. estimates of $7.5 billion. Tariff costs partly explain why earnings lagged sales. However, Deere noted in its Q4 earnings call that margins were running ahead of where they stood at the bottom of the prior cycle in 2016 despite the tariffs.

Outlook: Deere raised its outlook for full-year net income to a range of $4.5 billion to $5 billion from the prior range of $4 billion to $4.75 billion. Management put capital expenditures at around $1.4 billion, unchanged from the prior outlook.

The improving outlook didn’t come from Deere’s production and precision agriculture segment, where management expects sales to fall 5% to 10%. However, the company now sees small agriculture and turf segment sales up 15% vs. 10% previously. The outlook for construction and forestry machinery sales growth also was raised to 15% from 10%.

On the Q4 earnings call, Deere said its construction outlook reflected U.S. government infrastructure spending, declining interest rates, investments in rental fleets and surging data center construction, along with a modest expected lift to housing starts.

Deere Stock

Deere stock jumped 5.4% to 626.98 in early Thursday stock market action. Deere broke out of an eight-month cup base on Feb. 3, clearing a 533.78 buy point.

Be sure to read IBD’s The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.

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