Deere & Company

Deere & Company is an American heavy equipment manufacturer that designs, produces, and finances agricultural, construction, and forestry machinery through a global dealer network, generating $38.9 billion in equipment operations net sales in fiscal 2025. The company operates through four segments — Production & Precision Agriculture (PPA), Small Agriculture & Turf (SAT), Construction & Forestry (CF), and John Deere Financial — and employs roughly 73,000 people from its headquarters in Moline, Illinois. Its shares trade on the New York Stock Exchange and are a component of the S&P 500 index.

This is a story about what happens when a deeply cyclical business structurally improves its through-cycle profitability, then confronts a proper downturn. Deere earned $10.2 billion in net income at the FY2023 peak; it earned $5.0 billion at the FY2025 trough, and management guided to roughly the same level for FY2026. That a company can lose nearly a quarter of its equipment revenue — PPA alone contracted 17% in FY2025 — and still print double-digit operating margins in two of three segments is what the Smart Industrial Operating Model was supposed to deliver. The question now is whether the improvement is durable enough to make today's roughly 32× trailing earnings a reasonable entry point, or whether the market is already pricing a recovery that may not arrive on schedule.

The file turns on a single debate: when does the large agricultural equipment cycle resume, and what does Deere look like if it takes longer than the consensus expects? The three segments are at fundamentally different points in their cycles — large ag is below trough, small ag and turf is progressing toward mid-cycle, and construction and forestry is slightly above mid-cycle — which makes the portfolio more resilient than past downturns but also means the recovery narrative rests disproportionately on one segment's inflection.