Deere Has Priced In the Recovery Before the Fields Have Confirmed It

At $586.86, Deere trades at nearly 32 times the $18.50 it earned in fiscal 2025 — an unusually rich number for a company whose earnings are still falling. Revenue dropped 11.6% in fiscal 2025 and diluted EPS fell 27.8% to that $18.50 , the second straight down year off the 2023 peak, yet the stock is up 26.1% year to date and sits within striking distance of its $674.19 high, well above the $433.00 trough of the past year . The market has already decided that the ag cycle is bottoming and that the next leg is up. That is probably the right call directionally. The question this piece takes seriously is whether it is the right call at this price — because when a deeply cyclical manufacturer is valued as though the recovery is a formality, the burden of proof shifts, and Deere has not yet supplied it.

What You Are Actually Buying

Deere is not a tractor company in the way the label suggests. It runs four reporting segments, and the mix matters to the thesis. Production and Precision Agriculture — the high-horsepower tractors, combines, and the precision-guidance and autonomy stack layered on top — is the profit engine, at roughly $17.0B, or 38% of fiscal 2025 revenue on the product-line view . Small Agriculture and Turf (compact tractors, mowers, utility equipment) is the next tier. Construction and Forestry spans compact construction, roadbuilding, and forestry machines. And Financial Services is the captive lender that finances dealer inventory and customer purchases — a balance-sheet business, not a manufacturing one, which is why Deere's consolidated $64.16B of debt against $27.4B of equity looks alarming until you separate the finance book from the industrial company .

The bull case, which the stock now embodies, is straightforward: large ag is scraping bottom, Construction and Forestry is inflecting up, and a growing...