What is Deere & Company's TTM Return on Invested Capital (ROIC)?

Deere & Company (DE) reported 18.5% TTM ROIC in FY2025 (Trough).

What is Deere & Company's economic moat?

Deere & Company has a Wide economic moat. Dealer network density, 189-year brand equity, Operations Center data switching costs, and a compounding agricultural data lake create a wide and widening moat.

What is the bull case for Deere & Company?

Deere & Company bull case: Tariff resolution + cycle recovery + precision ag re-rate: FY2028 EPS $30+; precision ag valued at SaaS multiple (25x ARR); SOTP $570-630 → +1-12%

What is the bear case for Deere & Company?

Deere & Company bear case: Cycle extends; tariff persists: FY2027 EPS $19-20; multiple compresses to 17x → -15-20%

What are the top catalysts for Deere & Company?

Top catalysts: Q2 FY2026 earnings (May 21, 2026) — PPA operating profit stabilization; Tariff resolution (H2 2026-2027) — potential $1.2B annual headwind relief; Q4 FY2026 + FY2027 guidance (Nov 2026) — cycle recovery confirmation.

What are the top risks to Deere & Company?

Top risks: Ag cycle extends 18-24+ months vs. FY2027 recovery thesis (30% probability, HIGH severity); Tariff persists or escalates ($1.2B+ annual headwind, 35% probability, HIGH severity); Precision ag adoption underperforms (ARR plateaus <$2B, 25% probability, MEDIUM severity).

What is Deere & Company's operating margin?

Deere & Company (DE) reports 20.6% operating margin (FY2025). Gross margin 38.4%. FCF margin 7.5%.

Who are Deere & Company's main competitors?

Deere & Company (DE) directly competes with CNH Industrial, AGCO, Kubota.

How does Deere & Company make money?

Deere & Company (DE)'s top revenue segments: Production & Precision Agriculture (PPA) (38%), Construction & Forestry (CF) (25%), Small Agriculture & Turf (SAT) (22%) (FY2025).

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Deere & Company

Q: What is Deere & Company's operating margin?

Deere & Company (DE) reports 20.6% operating margin (FY2025). Gross margin 38.4%. FCF margin 7.5%.

Q: Who are Deere & Company's main competitors?

Deere & Company (DE) directly competes with CNH Industrial, AGCO, Kubota.

Q: How does Deere & Company make money?

Deere & Company (DE)'s top revenue segments: Production & Precision Agriculture (PPA) (38%), Construction & Forestry (CF) (25%), Small Agriculture & Turf (SAT) (22%) (FY2025).

NEUTRAL

May 23, 2026

Research Conclusion

HOLD — Moderate Conviction. Deere is the global leader in ag equipment with real precision-ag SaaS optionality on top of a deep cyclical trough. At ~$562 vs. PWFV $467-490, modest overvaluation (-15%); cycle recovery is largely priced. The investment is wait-for-better-entry: aggressive add below $430 (bear case priced); steady accumulation $450-510. Quality moat + cycle recovery + precision ag option supports patient holding.

Company Overview & Moat Assessment

Deere & Company (NYSE: DE) is the global leader in agricultural equipment (large tractors, combines, sprayers, planters) with growing precision-ag software (Operations Center, UAL, autonomous tractors) and top-3 position in construction/road-building machinery (Wirtgen). FY2025: revenue $45.7B, net income $5.0B, diluted EPS $18.50. Four segments: Production & Precision Ag (38%), Small Ag & Turf (22%), Construction & Forestry (25%), Financial Services (15%). The company is mid-ag-cycle trough; Q1 FY2026 PPA operating profit collapsed 83% YoY. CEO John May; CFO transition underway. Wide moat: brand, dealer network, equipment platform, precision ag data lake.

▲ Bull Case

◆Tariff resolution + cycle recovery + precision ag re-rate: FY2028 EPS $30+; precision ag valued at SaaS multiple (25x ARR); SOTP $570-630 → +1-12%
◆Precision Ag adoption accelerates beyond expectations: Operations Center ARR $6B+ by FY2030; SOTP unlocks $50+/share incremental
◆Ag cycle recovery sharper than expected: FY2027 EPS $28; multiple expansion to 22x → $616 (+10%)

▼ Bear Case

◆Cycle extends; tariff persists: FY2027 EPS $19-20; multiple compresses to 17x → -15-20%
◆Precision ag adoption stalls: Operations Center ARR plateaus at $1.5B; option valued at $0 → -9-13%
◆Severe ag depression (1980s parallel): FY2027 EPS $14; multiple 14x → -50-60%

Primary Debate on Wall Street

“Bulls: Quality moat + cycle recovery FY2027 + precision ag option = compounder. Bears: Cycle trough is deeper; tariff overhang; precision ag adoption uncertain. Decision-margin: timing and magnitude of FY2027 recovery + precision ag scaling. Q2 FY2026 (May 21) is the next data point. The R/R is positive at $430-490, neutral at $510-560, negative at $610+.”

Top Catalysts

◆Q2 FY2026 earnings (May 21, 2026) — PPA operating profit stabilization
◆Tariff resolution (H2 2026-2027) — potential $1.2B annual headwind relief
◆Q4 FY2026 + FY2027 guidance (Nov 2026) — cycle recovery confirmation
◆Precision Ag ARR milestone disclosure (H2 2026) — Operations Center monetization proof
◆Fed rate cuts (2026-2027) — equipment financing tailwind

Top Risks

◆Ag cycle extends 18-24+ months vs. FY2027 recovery thesis (30% probability, HIGH severity)
◆Tariff persists or escalates ($1.2B+ annual headwind, 35% probability, HIGH severity)
◆Precision ag adoption underperforms (ARR plateaus <$2B, 25% probability, MEDIUM severity)
◆Ag sector depression deeper/longer than expected (5-10% probability, EXTREME severity)
◆Competitive M&A by CNH/AGCO in precision ag space (30% probability, MEDIUM severity)

Full Memo Continues

5 more sections, locked

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Valuation Range & DCF
Base/bull/bear fair-value range, WACC, terminal growth, sensitivity to revenue + margin assumptions.
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Risk/Reward Assessment
Position-sizing framework with explicit upside/downside skew and entry conditions.
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Management & Capital Allocation
Multi-year capital-allocation track record, incentive alignment, and management readout.
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Monitoring Framework
What to watch each quarter — leading indicators and inflection signals tracked by the analyst.
●
Unresolved Questions
Open analyst questions and follow-up research items — the depth signal.

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