Deere & Company reported third-quarter earnings that exceeded analyst expectations, driven by a 16.7% revenue beat and an 8.7% earnings-per-share surplus. The Moline, Illinois-based manufacturer posted EPS of $5.10 on revenue of $12.61 billion, compared with estimates of $4.69 and $10.81 billion, respectively. The company’s stock rose 7.1% to close at $621.74, valuing it at $156.73 billion.
Equipment operations margin expanded to 14.4%, supported by $110 million in tariff refunds that provided roughly 60 basis points of relief in the Production & Precision Agriculture segment. Management estimated net tariff exposure would reach approximately $1 billion by fiscal 2027, up from an expected $750 million in FY2026 after refunds. Total direct tariff expense for FY2026 was projected at $1.1 billion.
Segment performance diverged, with Small Agriculture & Turf sales rising 12% year-over-year to $3.38 billion, while Construction & Forestry revenue surged 18% to $3.62 billion, driven by data center construction activity. Operating profit in the segment nearly doubled to $436 million. Production & Precision Agriculture sales fell 6% to $4.00 billion, with operating profit declining to $527 million from $580 million.
Management identified fiscal 2026 as the trough of the agricultural equipment cycle, anticipating a gradual recovery in FY2027. Early order programs for model year 2027 planters and sprayers showed mid-single-digit improvements versus the prior year. Consensus EPS estimates for FY2027 stand at $22.19, implying a 23% earnings rebound from the cycle’s low point. Over the past year, consensus EPS estimates were revised downward by 13.4%, with 18 downward revisions and five upward ones in the 90 days preceding the report.
Deere highlighted progress in precision agriculture, with its John Deere Operations Center covering 475 million engaged acres, up 15% year-over-year. Highly engaged acres grew more than 25%, while factory adoption of See & Spray technology was expected to nearly double. The company also announced plans to launch autonomous tillage for model year 2026.
Oppenheimer reiterated an Outperform rating, noting that the earnings beat lowered expectations while tariff recovery provided margin tailwinds.
