Deere’s Q3 Beat Is a Trap. The Farming Machine Is Still Stuck in the Mud.

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(SeaPRwire) –   By: Logan Pierce

Let’s get one thing straight. Deere beat Q3 estimates. $5.10 EPS on $12.61 billion in revenue. The market yawned. Stock ticked up 0.6% in premarket. That’s not a rally. That’s a sigh of relief from a room full of people who expected a fire alarm to go off.

The problem is simple. The numbers look good only because the bar was sitting on the floor. Wall Street was pricing in disaster. Deere delivered mediocrity. And the market rewarded it with a half-percent pop. Agricultural equipment sales came in at $7.4 billion. That’s up from $7.3 billion a year ago. Modest growth, sure. But compare that to $41 billion in total equipment sales back in fiscal 2023. The peak feels like a different era.

The real story here is the downward spiral that refuses to end. Equipment sales fell to $32 billion in 2024. Then $28 billion in 2025. The company expects to stay around $28 billion for 2026 before maybe bumping to $30 billion in 2027. That’s two years of stagnation before a potential recovery. That’s not a V-shaped rebound. That’s a flat line on a hospital monitor.

Deere raised its full-year net income guidance to $4.75 billion to $5 billion. The May guidance was $4.5 billion to $5 billion. So they tightened the low end. Good. But the company earned around $5 billion in fiscal 2025. They’re guiding to earn roughly the same amount this year. That’s not growth. That’s running in place while the industry slows down around you.

The revenue beat was driven by the Construction and Forestry segment, which jumped 18% year over year to $3.6 billion. That’s the bright spot. But the core agricultural business is still getting hammered. Large equipment sales in North America are expected to fall 15% to 20%. South America guidance was trimmed to a 15% to 20% decline. Europe was cut to flat, down from flat to up 5% before. Every region is getting worse.

Margins in the large ag machinery segment are under pressure. That’s where the real money is made. And that’s where the pain is concentrated. JPMorgan’s Tami Zakaria cut her 2027 EPS estimate from $22.81 to $20.49. The consensus sits at $22.19. That gap matters. It means the sell-side is still too optimistic about the recovery timeline.

Here’s the part that keeps me up at night. Deere’s stock trades at 27 times forward earnings. Three years ago, when the ag business was booming, that multiple was 12 times. The stock is priced for perfection. But the business is nowhere near perfect. Farmer income is under pressure. Corn prices are well off their highs. The days of $8 per bushel corn are gone. Equipment spending follows crop prices. And crop prices are weak.

The stock is up 31% year to date. It’s up 19% over the past 12 months. That’s a lot of good news baked into a business that’s guiding for flat to declining sales. The sentiment is skewed negative. The multiple is stretched. And the fundamentals are trending in the wrong direction.

Deere’s financial health is rated “fair performance” by InvestingPro. That’s generous. The company is generating cash, sure. But the trajectory is clear. The equipment cycle is still in a downturn. The guidance raise was a Band-Aid, not a cure. The stock is pricing in a recovery that hasn’t arrived yet. And every quarter that passes without a rebound makes that multiple look more indefensible.

I’ll leave you with this. The beat was real. The guidance raise was real. But the underlying demand is still soft. The stock is priced for a cyclical recovery that may not materialize until 2027 or later. Buying Deere here is a bet on farmer income improving. That’s a bet I’m not ready to make. Not at 27 times earnings.

Author bio: Logan Pierce, an independent business researcher and corporate governance writer on Medium, tracking industry cycles, earnings mechanics, and the gap between market sentiment and real economic activity.