- 2025 Net Income: Over $5 billion, with full-year equipment operations margins at 12.6% despite 12% sales decline.
- 2026 Guidance: Net income forecasted at $4–4.75 billion, with cash flow from equipment operations projected at $4–5 billion despite $1.2 billion tariff impact.
- Inventory Efficiency: New field inventory for 220+hp tractors at 17-year low, with 8% inventory-to-sales ratio for combines and four-wheel drive tractors.
- Segment Growth: Small Ag & Turf and Construction & Forestry forecasted 10% sales growth in 2026, while Production & Precision Ag faces 5–10% decline.
- Technology Impact: John Deere Operations Center covers 500 million acres, and See and Spray achieves 50% herbicide savings, covering 5+ million acres.
Segment-wise Performance and Outlook
The company's segment-wise performance and outlook indicate a challenging year ahead, particularly in the Production and Precision Ag segment, where net sales are expected to be down 5-10% in 2026. However, the Small Ag and Turf segment is expected to see growth, with net sales up around 10%, driven by improving end-market demand and producing closer to retail demand. The Construction and Forestry segment is also expected to grow, with net sales up around 10%, driven by producing North American earthmoving equipment in line with retail demand.
Technological Advancements and Growth Drivers
Deere & Company has made significant advancements in technology, including the John Deere Operations Center, which has engaged over 3,200 customer organizations. The company's automation technologies, such as See and Spray, have seen impressive adoption, with over 5 million acres covered and an average herbicide savings of around 50%. The installed base is growing with new model year 2026 sprayers and additional retrofit kits, contributing to growth.
Valuation and Financial Metrics
Deere & Company's current valuation metrics, such as a P/E Ratio of 24.98, P/B Ratio of 4.84, and EV/EBITDA of 16.4, indicate a premium valuation. However, the company's ROE (%) of 20.54 and ROIC (%) of 7.89 suggest strong profitability. The Dividend Yield (%) of 1.4 and Free Cash Flow Yield (%) of 2.57 indicate a relatively attractive return for shareholders. Analysts estimate next year's revenue growth at 4.2%, which may impact the company's valuation multiples.
Guidance and Outlook
The company's guidance for 2026 assumes a challenging year due to tariffs, with a $1.2 billion pretax hit. However, Deere expects to see improvement in margins as the year progresses, with a more traditional seasonality pattern. The company remains focused on long-term customer value through technology, expecting future growth and greater value for shareholders and stakeholders.