The Deere story

What drives the business

• Deere’s Smart Industrial strategy combines farm and construction machinery with connected technology and aftermarket support, including products such as See & Spray and the John Deere Autonomous 8R Tractor.
• Production & Precision Agriculture serves large farms with tractors, harvesting equipment and crop care machinery, while Small Agriculture & Turf serves smaller agricultural and turf customers.
• In the quarter to August 2026, higher shipment volumes and favorable pricing helped Small Agriculture & Turf net sales grow 12%, while Construction & Forestry net sales increased 18%.
• The $439 million acquisition of Tenna LLC in February 2026 added equipment operations and asset tracking tools for mixed fleets to Construction & Forestry.
• Financial Services supports equipment purchases, and the February 2025 completion of Banco Bradesco S.A.’s investment as a 50% owner of Banco John Deere S.A. was intended to reduce Deere’s incremental risk as it expands in Brazil.

What the price assumes

At $689.59, the reverse DCF implies that free cash flow after stock pay grows 13.7% a year for ten years, using a 10.2% discount rate.

Deere delivered 10.6% annual growth on that measure over the last 10 years, while the TenQ check sets a 7.3% bar by slowing that record halfway toward 4%.

The implied pace therefore exceeds both comparisons, alongside a 3.2% free cash flow yield and $6.0 billion of free cash flow over the last twelve months.

Value DE on your own assumptions

What could change the story

• Farm income, commodity prices and trade conditions can delay equipment demand, and Production & Precision Agriculture’s operating margin narrowed to 13.2% from 13.6% in the quarter to August 2026 as lower shipment volumes and higher production costs weighed on profit.
• Tariff recoveries of $110 million benefited production costs in the quarter to August 2026, so reported profitability also reflects relief from tariffs rather than demand and pricing alone.
• Revenue growth of 8.0% over the last twelve months contrasts with an annual pace of -4.6% over the last three years, leaving sustained growth unproven.
• Interest coverage of 3.11 falls below the TenQ check’s 5.00 bar, while interest rate volatility can affect both customer demand and the financing business.

What to watch next

• Deere’s fiscal 2026 net income guidance is $4.75 billion to $5.00 billion, with Financial Services net income expected around $870 million.
• Its fiscal 2026 segment outlook calls for Production & Precision Ag net sales to decline approximately 10%, Small Ag & Turf to grow approximately 15%, and Construction & Forestry to grow approximately 20%.
• Early order programs, used-equipment inventories and adoption of advanced technologies are the indicators management cites for its expectation that 2026 marks the agricultural equipment cycle’s bottom.
• The next releases’ shipment volumes, segment margins and tariff recoveries will help distinguish stronger underlying operations from cost relief.

Sources

• Deere's earnings release, filed with the SEC
• Its latest 10-Q or 10-K, for the risk factors
• The DE stock report, for every figure and check