Deere Raised FY26 Net Income Outlook: Is Growth Sustainable?

Deere & Company DE recently increased its net income guidance for fiscal 2026 to $4.5-$5 billion. This is backed by the expected 15% increase in the company’s Small Agriculture & Turf segment and Construction & Forestry segment’s sales.

Deere returned to revenue growth in the fourth quarter of fiscal 2025, with the metric rising 11% on higher volumes after eight consecutive quarters of declines. This positive streak continued in the first quarter of 2026, with revenues increasing 17.5% from the prior-year quarter.

However, earnings fell year over year as increased production costs and tariff-related pressures offset higher shipment volume gains. The company reported nine consecutive quarters of year-over-year decreases in net income.

Even though Deere increased its net income guidance for fiscal 2026, the range indicates a 6% year-over-year decrease at the mid-point. Net sales for Production & Precision Agriculture are expected to decrease 5-10% year over year. The Financial Services segment’s net income is expected to be $840 million, indicating a dip of 5.6% from the fiscal 2025 reported figure.

The U.S. Department of Agriculture forecasts a 0.7% year-over-year dip in net farm income to $153.4 billion in 2026. Total crop receipts are expected to inch up 1.2%, driven by higher corn and hay receipts. In inflation-adjusted terms, total crop receipts are predicted to fall 0.7%. Total production expenses are expected to increase 1%, with livestock/poultry purchases, feed and labor to be the three major expense categories.

With the overall farm income expected to decline, this will weigh on the near-term demand for Deere’s equipment, and other farm equipment manufacturers like AGCO Corporation AGCO and Lindsay Corporation LNN.

AGCO Corp’s earnings returned to growth in the fourth quarter of 2025 after declining for seven consecutive quarters. AGCO Corp expects 2026 sales to be $10.4-$10.7 billion, indicating year-over-year growth of 4%. In North America, AGCO Corp expects sales volumes of large agricultural equipment to be down 15% and small agricultural equipment to be flat to up 5%. In Western Europe, sales will likely be flat to 5% and sales in Brazil will likely be flat.

Lindsay generated revenues of $156 million in the first quarter of fiscal 2026, down from $166 million in the year-ago quarter. Lindsay expects demand for irrigation equipment in North America to stay challenging till commodity prices and farm income improve. However, LNN continues to anticipate growth in Brazil. In fiscal 2026, Lindsay will manage a robust pipeline of Road Zipper System projects, but it does not expect to deliver any large project.

DE’s Price Performance, Valuations & Estimates

Deere shares have gained 21.8% in a year compared with the Zacks Manufacturing - Farm Equipment industry’s 17.3% growth. In comparison, the broader Zacks Industrial Products sector has returned 24% and the S&P 500 has rallied 21.6%.

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Deere is currently trading at a forward 12-month price/earnings of 28.53X, a premium compared with the industry’s 26.95X. It is also higher than DE’s five-year median of 24.27X.

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The consensus estimate for fiscal 2026 earnings suggests a year-over-year decline of 2.9%. However, the same for fiscal 2027 indicates growth of 27.9%. The Zacks Consensus Estimate for 2026 sales implies 4.9% growth. The same for fiscal 2027 suggests growth of 8.7%.

EPS estimates for 2026 and 2027 have moved north over the past 60 days.

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Deere currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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