# Deere & Company (DE) — InvestMoat Analysis

_Last analyzed: August 23, 2026_
_Asset class: equity · Canonical page: https://investmoat.com/stocks/de_

## Scores

| Dimension | Score (0–100) |
| --- | --- |
| Moat durability | 74 |
| Growth trajectory | 64 |
| Valuation | 65 |
| **Composite** | **67** |

Scores are computed deterministically from this asset’s data by the InvestMoat formula (see https://investmoat.com/llms.txt for methodology). Scores are not directly comparable across asset classes.

## Key stats

- **Ticker:** DE
- **Market Cap:** ~$175B

## Moat

Dominant North American farm equipment franchise with the largest agricultural dealer network and a credible precision-ag software franchise — durable but cyclical. Large-ag demand is still soft, but Construction & Forestry books now run into FY27 and See & Spray / Operations Center adoption (>450k MAU) are extending the moat through the trough.

### The Dealer-Plus-Software Moat

Deere's moat is **the largest agricultural dealer network in the West paired with a growing precision-ag software franchise** — durable on hardware, with optionality on software:

- **Dealer Network Density:** Deere's North American dealer footprint is unmatched — closer to farms, faster service, and parts availability that competitors (CNH, AGCO, Kubota) cannot match in core US/Canadian markets. Switching tractor brands means losing service proximity, which is a first-order farmer concern in season.
- **Precision Ag Software Optionality:** John Deere Operations Centre (>450K monthly active users; >520M engaged acres across ~1.2M connected machines) + See & Spray (5M acres as of Q2, up from 1M; Q3 factory take-rate ~1/3 of North American sprayers on order) + autonomous tractor development are real software franchises. Precision Essentials second-year renewal rates exceed 90% (Q2). The recurring layer compounds on the installed connected-machine base and is the structural moat extension through the hardware cycle.
- **Cyclical Discipline:** Through-cycle margin discipline and capital return have been industry-leading. Equipment-ops margin was 14.4% in Q3 FY26 (16.9% in Q2) against ~$1.1B FY26 direct tariff expense ($382M YTD refunds; FY27 net ~$1B) and Production & Precision Ag sales −6% — better trough resilience than CNH/AGCO, aided by Small Ag & Turf (+12%) and Construction & Forestry (+18%).

**Moat verdict:** Deere is a high-quality industrial-AI franchise — autonomous farming and computer vision (See & Spray) compound the moat through the ag trough. Q3 confirms the software-extension thesis (>450K MAU, ~1/3 of NA sprayers on order with See & Spray) without a 10-moat status change. The near-term question is still cyclical (farmer balance sheet / large-ag orders) not technological; C&F strength into FY27 and precision adoption are carrying the print until PPA turns. AI is structurally additive.

### Top competitors

- **CNH Industrial (CNH):** Case IH and New Holland tractors and combines.
- **AGCO (AGCO):** Fendt and Massey Ferguson, plus precision ag via PTx Trimble.
- **Kubota (6326.T):** Compact tractors and small construction equipment.

## Growth

Q3 FY26: revenue $12.608B (+5%) and diluted EPS $5.10. Production & Precision Ag −6%, Small Ag & Turf +12%, Construction & Forestry +18%. FY26 net-income guide raised to $4.75–5.0B (floor +$250M vs the Q2 $4.5–5.0B hold); PPA sales tightened to ~−10%, SAT ~+15%, C&F ~+20%. Management reiterates that 2026 is the ag-cycle bottom; North America EOP planter+sprayer orders are already up mid-single digits vs last year's completed program, and C&F books are full into FY27. Q2 ($13.4B, EPS $6.55, PPA −14% / SAT +16% / C&F +29%) is in these figures. US & Canada large-ag industry still −15 to −20%; South America −15 to −20%; Europe now flat. Q4 prints 25 November 2026, 9:00 a.m. CT.

- **Revenue CAGR estimate:** 5-8%
- **Primary type:** market share
- **Margin trend:** stable
- **Key risk (moderate):** If farmer income stays depressed through 2027 and the large-ag replacement cycle does not turn — while C&F growth cools from +20% toward mid-single digits — FY27 EPS stalls near $20 and the ~30×+ trough multiple compresses toward 18–20×.
- **Drivers:**
  - Production & Precision Ag — Q3 sales −6%; FY26 guide tightened to ~−10%; EOP planter+sprayer + mid-single digits vs last year's completed program; management: FY26 cycle bottom (stable)
  - Construction & Forestry — Q3 sales +18%; FY26 guide ~+20%; 2026 books largely full, backlogs extend well into FY27 (4–5 months vs typical 2–3) (accelerating)
  - Precision Ag / See & Spray — See & Spray 5M acres as of Q2 (from 1M; Q3 gave no new acre total); factory take-rate ~1/3 of NA sprayers on order; Ops Center >450K MAU (accelerating)
- **Score derivation:** Base 66 (5–8% CAGR mid-band, held) + 2.7 trajectory (C&F and precision ag accelerating; PPA left stable — EOP planter+sprayer + mid-single digits is an early-recovery signal, not a closed FY27 book) + 0 margin (tariff-pressured but through-cycle floor intact; SAT margin guide raised, Q4 refunds drop out) − 5 farmer-income/cycle residual risk = 64. NI floor $4.5–5.0B → $4.75–5.0B is a description update, not a CAGR lift. PPA stays stable: FY26 books are still trough (guide tightened to ~−10%); 2027 recovery is measured.

## Valuation

At $647.47 (Friday 21 August 2026 close) Deere sits 0.4% below the $650 base after the Q3 beat — the Aug 10 card was ~$613 / authored 70. On FY26 trough EPS (~$18 at the $4.875B NI midpoint / ~270.7M diluted shares) the stock is ~36× — still a full precision-ag/software premium into a cycle bottom. Through-cycle valuation is closer to 20–24× normalised mid-cycle earnings; margin of safety is thin unless the FY27 recovery lands. The score is the live-price formula on an unchanged $470 / $650 / $820 ladder (t = (647.47 − 470) / 180 = 0.9859 → 65), not a thesis rewrite.

| Multiple | Value | Note |
| --- | --- | --- |
| Forward P/E (FY26) | ~36× | NI guide midpoint ~$4.875B → ~$18 EPS; trough cycle |
| Forward P/E (FY27) | ~28× | Street ~$23 EPS on cycle recovery (Yahoo ~$22.62, 21 analysts) |
| Price / Sales (NTM) | ~3.7× | Premium vs historical DE; software-mix justification; ~$175B cap vs Aug 10 ~$165B / ~3.5× |
| PEG Ratio | ~3×+ | Reflects through-cycle CAGR, not trough rebound |
| FCF Yield | ~3% | Equipment-ops CF guide $5.0–5.5B (floor +$0.5B at Q3); recovers with cycle |

Valuation already prices a clean cycle bottom and precision-ag optionality. $647.47 is the $650 base; upside from here is mostly earnings recovery into the base/bull corridor, not multiple expansion. Static score moved 70 → 65 because spot moved inside an unchanged $470 / $650 / $820 ladder. _(as of August 2026)_

## Price scenarios

### Bear — $470

Large-ag trough extends through 2027, C&F cools, and the multiple compresses from the mid-30s toward ~20× on still-depressed earnings.

- Grain prices and farmer income stay below long-term average through 2027; PPA replacement cycle slips into 2028
- Construction order book rolls over as data-centre/infra pull-forward fades
- See & Spray acre growth and Precision Essentials renewals slow as hardware install base stagnates

### Base — $650

FY26 prints as the cycle bottom inside the $4.75–5.0B NI guide; FY27 EPS recovers toward ~$23–25, precision-ag ARR/renewals keep compounding, and the multiple settles near ~26×.

- PPA shipments stabilise then reaccelerate in FY27 as dealer inventories normalise; EOP planter+sprayer already + mid-single digits
- C&F sustains low-double-digit growth off the FY26 +20% guide, with books already full into FY27
- See & Spray factory take-rate and Ops Center engagement keep compounding; software mix supports the premium

### Bull — $820

Cyclical recovery plus autonomy/See & Spray commercial scale drives FY28 EPS to $30+ and a quality re-rate toward ~27×.

- Autonomous tractor and See & Spray commercial deployment accelerates in 2027–28
- Precision-ag recurring revenue becomes a visible, high-margin earnings pillar
- Capital return steps up as cycle EBITDA recovers and tariff headwinds ease

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