Deere raises fiscal 2026 outlook as construction lifts Q3 profit 7%

Deere reported Q3 net income of $1.379 billion, up 7% from a year earlier, as construction demand offset weak large-farm machinery sales.

"Deere delivered a strong quarter, reflecting disciplined execution by our teams and continued resilience across our portfolio," John C. May, chairman and chief executive officer, said.

Diluted EPS came in at $5.10 for the three months ended Aug. 2, versus $4.75 a year earlier. Worldwide net sales and revenues rose 5% to $12.608 billion, with equipment net sales of $10.999 billion compared with $10.357 billion, Deere said.

The Construction & Forestry segment drove the quarter, with net sales up 18% to $3.618 billion and operating profit surging 84% to $436 million. Small Agriculture & Turf posted a 12% sales gain to $3.383 billion and a 28% operating profit increase to $622 million. Those gains offset a 6% sales decline to $3.998 billion in Production & Precision Agriculture, where operating profit fell 9% to $527 million. Financial Services net income rose 7% to $219 million.

Deere raised the low end of its fiscal 2026 net income guidance to $4.75 billion from $4.5 billion, keeping the top end at $5 billion. The company recorded $110 million in tariff recoveries in the quarter and $382 million year to date.

For the first nine months, net income attributable to Deere totaled $3.808 billion, or $14.06 per share, down from $3.962 billion, or $14.57 per share, a year earlier.

Deere affirmed its view that 2026 marks the bottom of the agricultural equipment cycle, citing early order program trends and improving used-equipment inventories. The company expects U.S. and Canadian large-agriculture volumes to fall 15% to 20% this year, while construction equipment volumes are projected to rise 5% to 10%. Rivals CNH Industrial and AGCO face similar pressure in large farm machinery, while Caterpillar benefits from the same construction upcycle.

For fiscal 2026, Deere projects Production & Precision Agriculture net sales down about 10%, Small Agriculture & Turf up about 15%, and Construction & Forestry up about 20%. The company's February acquisition of construction-technology firm Tenna for $439 million was assigned to the Construction & Forestry segment.

Shares gained 3.59% to $601.50 following the release, on volume 5.5 times the average. The guidance raise shows management expects demand to recover as the cycle turns, with the full-year forecast implying fourth-quarter net income of roughly $942 million to $1.19 billion. Investors will watch the fiscal 2027 outlook on the next earnings call for signs of a rebound in large-farm machinery.

This article is for informational purposes only and does not constitute investment advice.