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FY2026 Q1
Improving
Deere & Company earnings call
Buzzberg read
Company says 2026 marks bottom of current cycle
Deere reported a strong Q1 with better-than-expected results but provided a cautious outlook that earnings for the season are at bottom. The company raised its full-year EPS guidance and highlighted resilience in construction and small ag while noting stabilization in large tractor demand. Tariffs remain a significant overhang. Q1 EPS of $2.42, a 6% beat vs expectations, with upside driven by better shipment volumes and operational efficiencies.
Buzzberg read Company says 2026 marks bottom of current cycle Deere reported a strong Q1 with better-than-expected results but provided a cautious outlook that earnings for the season are at bottom. The company raised its full-year EPS guidance and highlighted resilience in construction and small ag while noting stabilization in large tractor demand. Tariffs remain a significant overhang. Q1 EPS of $2.42, a 6% beat vs expectations, with upside driven by better shipment volumes and operational efficiencies. Read full analysisCollapse analysis
Deere reported a strong Q1 with better-than-expected results but provided a cautious outlook that earnings for the season are at bottom. The company raised its full-year EPS guidance and highlighted resilience in construction and small ag while noting stabilization in large tractor demand. Tariffs remain a significant overhang. Q1 EPS of $2.42, a 6% beat vs expectations, with upside driven by better shipment volumes and operational efficiencies.
- Raised FY2026 EPS guidance to $4.5-5.0 billion (from prior $4.0-4.5 billion), citing stronger small ag, construction, and forestry performance.
- Construction and forestry segment saw net sales up 34% in Q1, with industry outlooks for North America raised to up 5%.
- Large tractor order books now extend into Q4, signaling firming demand and potential market share gains.
Revenue$9.611B-21% QoQ
EPS$2.42-38% QoQ
Gross margin34.66%Reported
Operating margin16.18%Reported
6 grounded callouts
What matters now
The highest-signal changes from the call.
Demand
Construction order bank up over 50% in quarter
Demand
Large tractor order books provide fourth-quarter visibility
Show 3 more callouts
Costs
Tariffs still projected at about $1.2 billion for 2026
Used Equipment
Late-model used 8R inventories down sharply
AI/Construction
AI infrastructure investment supports construction demand
Reported period
Actuals
| Metric | Reported | Change |
|---|---|---|
| Revenue | $9.611B | -21% QoQ |
| EPS | $2.42 | -38% QoQ |
| Gross margin | 34.66% | Reported |
| Operating margin | 16.18% | Reported |
| Free cash flow | $-1.578B | Reported |
| Capex | $0.688B | Reported |
Forward-looking
Forward guidance
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| Free cash flowEQUIPMENT_OPERATIONS | FY2026 | $4.5B–$5.5B | $5B | Raised |
| Operating marginCONSTRUCTION_FORESTRY | FY2026 | 9%–11% | 10% | Raised |
| RevenueTOTAL_EQUIPMENT_OPERATIO | FY2026 | 15% | 15% | Raised |
| RevenueSMALL_AG_TURF | FY2026 | 15% | 15% | Raised |
AI, capex & demand read
Management read
Optimistic
Management repeatedly framed 2026 as the cyclical bottom, highlighted stronger order books and momentum in construction and small ag, and sounded confident despite acknowledging challenged large ag fundamentals and tariff headwinds.
Management AI read
Management referenced AI mainly as a macro demand driver for construction equipment, citing huge infrastructure needs tied to AI investments. They also highlighted precision/automation technology adoption, such as combine harvest automation, as a competitive strength.
Investment and capacity
Management emphasized maintaining high levels of investment through the cycle to fund new product launches, technology introductions, and the Tenna acquisition. No specific capex figure was given, but the tone was clearly pro-investment while still returning cash to shareholders.
all 6 named companies below
Companiesreturns since call
Partners
Partners
Brian Campbell
New product debuts from the collaboration are expected to be a source of growth for the partnership.
Evidence
“The ConExpo event will feature 24 product launches, including world premieres of equipment from John Deere and six market debuts from the Vertcon Group.”
Competitors
Competitors
Brian Campbell
Deere is establishing its own machine design to differentiate from existing Hitachi collaboration, which may be poised to reduce competition/ reliance over time.
Evidence
“We've had a longstanding relationship with Hitachi with good products. This is a truly differentiated product that we're super excited to bring to the marketplace.”
Supply chain
Supply chain
Josh Beal
Deere's CNF order book rose by over 50% in Q1, reaching its highest level since May 2024, with visibility into H2, prompting a raise in construction industry outlook to +5% for 2026. — Order acceleration in Deere's construction segment signals broader market strength that may benefit key competitors but also intensifies competition.
Evidence
“What's perhaps most encouraging is that our order bank has risen by over 50% in the past quarter, reaching its highest point since May of 2024.”
Supply chain
Josh Beal
Large tractor order books now provide visibility into Q4, indicating a demand inflection and potential market share gains as replacement demand returns. — Demand improvement and inventory control in large ag are positive for Deere's earnings power and may pressure competitors' pricing strategy.
Evidence
“Large tractor order velocity for the North American market has picked up, and our rolling order books now provide visibility into the fourth quarter.”
Supply chain
Josh Beal
Used inventory for combines dropped about 20% sequentially? — Rapid used inventory reduction enables a healthier trade cycle, which is a leading indicator for new-equipment demand in the sector.
Evidence
“We saw a typical seasonal increase in used-year combines during our first quarter, However, current inventory levels for deer combines remain about 15% below their peak in March 2024 with model year distribution at a normal mix.”
Supply chain
Josh Beal
Deere is anticipating sustained price-cost neutral performance despite tariff impacts, showing stable margins compared to prior periods. — Sustainable price discipline in tough macro conditions could serve as a benchmark for other players in the market.
Evidence
“We'll be slightly unfavorable from a production cost standpoint, X tariffs, but overall, again, price cost neutral with the price actions that were taken.”
External signals
Supply-chain alpha · 4returns since call
Deere's CNF order book rose by over 50% in Q1, reaching its highest level since May 2024, with visibility into H2, prompting a raise in construction industry outlook to +5% for 2026.
Large tractor order books now provide visibility into Q4, indicating a demand inflection and potential market share gains as replacement demand returns.
Used inventory for combines dropped about 20% sequentially?
Deere is anticipating sustained price-cost neutral performance despite tariff impacts, showing stable margins compared to prior periods.
Methodology & coverage
Management-only analysis. All 6 validated company mentions are shown. Reported actuals and forward guidance are kept separate. Public evidence is limited to eight short attributed quotes. AI-generated analysis can be incomplete or wrong; verify important claims against the original source.