Industrials
69/100
69/100Is DE-Deere & a buy?
Thursday 24 September 2026
Why now: The August results reinforced management's view that 2026 is the low point of the agricultural equipment cycle, while construction and smaller-equipment demand remain supportive. The shares have just moved through a major price ceiling, but the breakout is new and needs confirmation.
Upside: The current Wall Street target is $731.20, only about 3.1% above the latest $709.48 premarket print. A larger return would require a genuine farm-equipment recovery and sustained adoption of Deere's technology offerings rather than simple multiple expansion.
Risks: Large agricultural equipment demand is still weak, and higher rates can restrict farmer and contractor purchasing power. The stock also leaves little protection if the expected cycle recovery is delayed.
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Scorecard
Read:Strong metricsSolid metricsSelectiveCautionUnfavourableN/A
| Scorecard | 69/100 | |
|---|---|---|
| Company Detail | DE - Deere & Company | |
| Price as at 23 September 2026 | $709.48 | |
| Market cap | $191.5B | |
| Quality and Fundamental Score (100) | ||
| Breakout / Early-Momentum /20 | 14/20 | |
| Rev/EPS Momentum /20 | 15/20 | |
| Business Quality /15 | 8/15 | |
| Balance Sheet /15 | 10/15 | |
| Valuation /10 | 3/10 | |
| Industry Relative Strength /10 | 10/10 | |
| Macro / Sector Tailwind /10 | 9/10 | |
| Growth | ||
| Cash runway | Cash generative | |
| Revenue YoY | -11.6% | |
| EPS YoY | -27.8% | |
| FCF YoY | -27.0% | |
| Gross margin | 36.5% | |
| Valuation & Trend | ||
| Trailing P/E | 39.3x | |
| Forward P/E | 39.2x | |
| RSI (14d) | 68 | |
| vs 50d SMA | +11.4% | |
| Support cushion | −6.2% | |
| Sentiment | ||
| Wall Street verdict | Aligned | |
| News tone | Positive | |
| Dividend | 0.9% | |
How are these colored?
| Metric | Strong metrics | Solid metrics | Selective | Caution | Unfavourable |
|---|---|---|---|---|---|
| Overall score | ≥ 80 | 70-79 | 60-69 | 50-59 | < 50 |
| Business quality /15 | ≥ 12 | 10-11 | 8-9 | 6-7 | < 6 |
| Balance sheet /15 | ≥ 12 | 10-11 | 8-9 | 6-7 | < 6 |
| Market cap | ≥ $20B | $5B-$20B | $2B-$5B | $1B-$2B | < $1B |
| Cash runway | ≥ 3 yr or cash generative | 1.5-3 yr | 0.75-1.5 yr | 0.25-0.75 yr | < 0.25 yr |
| Revenue YoY | ≥ 15% | 5-15% | 0-5% | -5-0% | < -5% |
| EPS YoY | ≥ 20% | 5-20% | 0-5% | -5-0% | < -5% |
| FCF YoY | ≥ 10% | 1-10% | 0-1% | -5-0% | < -5% |
| Gross margin | ≥ 60% | 40-60% | 25-40% | 10-25% | < 10% |
| Trailing P/E | < 15 | 15-25 | 25-35 | 35-40 | > 40 or neg |
| Forward P/E | < 15 | 15-25 | 25-35 | 35-40 | > 40 or neg |
| RSI (14d) | 50-70 | 45-50 or 70-75 | 40-45 or 75-78 | 30-40 or 78-80 | < 30 or > 80 |
| vs 50d SMA | +2% to +15% | 0-2% or 15-25% | -2-0% or 25-35% | -3--2% or 35-40% | < -3% or > 40% |
| Support cushion | 2-10% above | 0-2% | 10-15% | 15-20% | price below support |
| Wall Street verdict | Aligned | — | Mixed | — | Disagrees |
| News tone | Positive | — | Neutral / Mixed | — | Negative |
| Dividend | Yield ≥ 2% & growing | Growing | Flat payer ≥ 1% | Low / flat | Cutting |
Detailed Analysis — Thursday 24 September 2026
What they do
Deere & Company makes farm, construction, forestry, turf, and power equipment, and also provides replacement parts, digital tools, and financing. It earns money from equipment sales, recurring aftermarket support, technology services, and customer finance.
Leadership
John C. MayCEO
John C.
T. Brent NorwoodCFO
T.
Customers & notable contracts
Receiver of capital expenditure: Yes: Deere is a direct receiver of customer capital expenditure because farmers, contractors, forestry operators, and public agencies buy its durable equipment to improve output and lower operating costs.
Main customers
- Commercial farmers and agricultural producers (They buy tractors, combines, planting and spraying equipment, precision-agriculture tools, parts, and financing.)
- Construction and roadbuilding contractors (They buy and finance earthmoving, compact construction, roadbuilding, and related equipment.)
- Forestry operators and land-management customers (They use forestry machinery, attachments, replacement parts, and dealer service.)
Summary thesis
- Deere combines a leading equipment franchise, dealer network, financing capability, and an expanding precision-technology platform.
- Its differentiated opportunity is to help customers reduce fuel, labor, seed, and chemical use while earning more from software, data, service, and parts over the equipment life cycle.
- The near-term earnings recovery depends on the farm cycle, but the business is better positioned than a conventional machinery maker if technology adoption continues.
Wall Street alignment
Wall Street: Fully aligned (4/4)
Analyst consensus
Buy (2.67, 46 analysts) · +3% upside
Institutional ownership
84% institutions, insiders 0.2%
Short interest
1.9% of float short · 4.5 d-to-cover
Smart money tape
+3 net (acc 5 / dist 2, last 26d)
Recent news
News Positive · last 7d
Show 1 headline from the last 7d
2026-09-21Other+supportive
Court dismisses patent case against Deere, allows amended complaint ↗ · Justia Dockets & Filings
A federal court granted Deere's motion to dismiss a patent infringement case tied to its private fifth-generation wireless factory network. The plaintiff may file an amended complaint within 14 days, but the ruling reduces the immediate litigation risk.
Dividends
Yield (fwd)
0.91%
Latest (TTM)
$6.48
2025
$6.48
2024
$6.03
Payout ratio: 36%
Technicals
Price
$709.48
RSI (14d)
67.9
50d SMA
$636.91
200d SMA
$580.58
vs 50d SMA
+11.4%
vs 200d SMA
+22.2%
Support (swing low)
$665.45 −6.2%
40-day high (R): breakout confirmed
$705.88 −0.5%
Next swing high (52w high)
$721.22 +1.7%
Close as of 2026-09-23.
Score breakdown
Scores 69 out of 100. a decent overall grade. Relative strength versus its industry, sector fit, and earnings trend scored highest. Chart setup and balance sheet were fair but not standout drivers. Valuation weighed on the total. The score is capped because the recovery case is increasingly reflected in the share price, while customer financing sensitivity and the company's finance arm make higher rates a real constraint.
Component scores are on the scorecard above.
Momentum evidence
- DE is trading at $709.48 premarket, up 0.9% from the prior close, after clearing $705.88 and holding above that level for one completed session.
- The daily setup is strong but extended: the stock is at its 52-week high, the relative-strength index is 67.9, and it sits 11.4% above its 50-day average.
- Volume is constructive rather than decisive, with 20-day turnover only 1.24 times its prior 50-day baseline.
- Its industry-relative-strength score of 91.4 shows that capital is still favoring this industrial group.
Fundamental evidence
- Figures show annual revenue of $44.66 billion, net income of $5.03 billion, free cash flow of $3.23 billion, and a 36.5% gross margin.
- Returns remain strong, with 18.1% return on equity and 22.1% return on invested capital; the share count has fallen 14.18% over five years, and the dividend payout ratio is 36.0%.
- The key red flags are financial leverage and working-capital intensity: net debt to earnings before interest, taxes, depreciation, and amortization is 5.0 times, the current ratio is 0.77, and working capital is negative.
- Deere's financing receivables make those figures more understandable than for a pure equipment maker, but they still add credit and funding risk in a downturn.
Cash runway: Cash generative (latest annual free cash flow is positive).
Valuation view
Valuation is demanding for a cyclical machinery company. The shares trade at 39.3 times trailing earnings and 39.2 times forward earnings, while enterprise value is 5.2 times sales, 22.2 times earnings before interest, taxes, depreciation, and amortization, and 63.8 times free cash flow. The 2.0% free-cash-flow yield leaves little margin for an earnings reset if the recovery fails to arrive.
Macro tailwind
The central theme is productivity investment: growers and contractors have incentives to use automation, precision application, data tools, and newer equipment to offset labor, input, and operating costs. Construction equipment demand is also stronger than large agricultural equipment demand, helping balance the portfolio.
What to watch
Upcoming (1–6 months)
- Fourth-quarter earnings call scheduled for November 25, 2026.
Ongoing
- Early-order trends, used-equipment inventory, large agricultural equipment demand, and customer credit performance.
Long-term case
The multi-year case rests on Deere converting an installed base of equipment into a more valuable relationship built around precision tools, automation, connected-machine data, parts, dealer service, and finance. That strategy can improve customer economics and make Deere's revenue less dependent on selling one more machine at the top of a cycle. The core test is whether those technology benefits remain compelling enough for customers to adopt them through weaker farm-income periods.
Risks & invalidation
Risks
- Lower crop prices, weaker farm income, trade disruptions, or rising input costs could prolong the downturn in large agricultural equipment.
- Higher borrowing costs or credit losses in the financing portfolio could reduce equipment demand and pressure earnings.
Breaks the thesis
- A completed daily close back below $705.88 would negate the fresh breakout and indicate that the current price move failed.
Bottom line
Deere is a high-quality industrial franchise with unusually strong customer relationships and a credible path to earn more from technology, service, and financing over time. The central swing factor is whether the agricultural equipment cycle truly bottoms as management expects, because the current valuation already assumes a meaningful recovery. Construction strength and precision-agriculture adoption give the long-term case substance, but they do not eliminate cyclical and credit risk.