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FY2025 Q4
Softening
Deere & Company earnings call
Buzzberg read
Management sees fiscal 2026 as the bottom of the large ag cycle
Deere's Q4 2025 results showed resilient margins despite a severe ag downturn, but guidance for 2026 points to continued weakness in large ag, offset by growth in small ag/turf and construction/forestry. Management framed 2026 as the cycle bottom, with tariffs a major $1.2B headwind and a lean production strategy. FY2025 net income of $5B with 12.6% equipment ops margin, despite 13% sales decline.
Buzzberg read Management sees fiscal 2026 as the bottom of the large ag cycle Deere's Q4 2025 results showed resilient margins despite a severe ag downturn, but guidance for 2026 points to continued weakness in large ag, offset by growth in small ag/turf and construction/forestry. Management framed 2026 as the cycle bottom, with tariffs a major $1.2B headwind and a lean production strategy. FY2025 net income of $5B with 12.6% equipment ops margin, despite 13% sales decline. Read full analysisCollapse analysis
Deere's Q4 2025 results showed resilient margins despite a severe ag downturn, but guidance for 2026 points to continued weakness in large ag, offset by growth in small ag/turf and construction/forestry. Management framed 2026 as the cycle bottom, with tariffs a major $1.2B headwind and a lean production strategy. FY2025 net income of $5B with 12.6% equipment ops margin, despite 13% sales decline.
- FY2026 guides net income $4-4.75B, with PPA sales down 5-10%, SAT/CNF up ~10%.
- North America large ag industry expected down 15-20% in 2026; Europe flat-to-up 5%, South America flat.
- Tariffs: $1.2B pre-tax impact in 2026 (~$600M incremental); price-cost expected positive.
EQUIPMENT_OPERATIONS Revenue$10.6BReported
Revenue$12.094BReported
EPS$3.93Reported
Gross margin32.57%Reported
6 grounded callouts
What matters now
The highest-signal changes from the call.
Margins
Direct tariff expense guided to about $1.2 billion in fiscal 2026
Production
Management plans lean Q1 large ag production but keeps back-half flexibility
Show 3 more callouts
Inventory
Used inventory is improving through targeted pool funds and dealer focus
Demand
North American earth moving order book is up roughly 25% year over year
Technology
See & Spray adoption is scaling with roughly 50% average herbicide savings
Reported period
Actuals
| Metric | Reported | Change |
|---|---|---|
| EQUIPMENT_OPERATIONS Revenue | $10.6B | Reported |
| Revenue | $12.094B | Reported |
| EPS | $3.93 | Reported |
| Gross margin | 32.57% | Reported |
| Operating margin | 15.67% | Reported |
| Free cash flow | $2.628B | Reported |
Forward-looking
Forward guidance
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| Operating marginPRODUCTION_PRECISION_AG | FY2026 | 11%–13% | 12% | Guided |
| Operating marginSMALL_AG_TURF | FY2026 | 12.5%–14% | 13.25% | Guided |
| Operating marginCONSTRUCTION_FORESTRY | FY2026 | 8%–10% | 9% | Guided |
| RevenuePRODUCTION_PRECISION_AG | FY2026 | -10%–-5% | -7.5% | Guided |
| RevenueSMALL_AG_TURF | FY2026 | 8%–12% | 10% | Guided |
| RevenueCONSTRUCTION_FORESTRY | FY2026 | 9%–11% | 10% | Guided |
AI, capex & demand read
Management read
Cautiously Optimisti
Management acknowledged the down-cycle and tariff headwinds but repeatedly cited signs of stabilization, a likely 2026 trough in large ag, and growth in small ag/turf and construction/forestry.
Management AI read
Management did not frame it as 'AI' explicitly but described accelerating adoption of its autonomy and precision stack: See & Spray covered >5M acres with ~50% herbicide savings, Harvest Settings automation took a >90% first-year take rate, and autonomous tillage has covered >200K acres. Monetization remains embedded in equipment/software attach and customer value creation rather than a separate A
Investment and capacity
No standalone capex figure was disclosed. Management highlighted record R&D investment in fiscal 2025 and said it remains focused on supporting robust levels of R&D and capital spending to fund technology-led growth, implying capital investment is being maintained through the downturn.
all 2 named companies below
Companiesreturns since call
Supply chain
Supply chain
Deanna Kovar
Deere will keep North American large ag production lean in Q1, avoiding the typical seasonal inventory build, with flexibility to ramp later — signaling ongoing retail weakness and used inventory overhang. — Competitors' production plans will be pressured to match Deere's cautious stance, potentially intensifying price competition.
Evidence
“It's our intent to start the new fiscal year with lean production for North American large ag, while building flexibility in the full-year production plan to respond quickly when the market inflects.”
External signals
Supply-chain alpha · 1returns since call
Deere will keep North American large ag production lean in Q1, avoiding the typical seasonal inventory build, with flexibility to ramp later — signaling ongoing retail weakness and used inventory overhang.
Methodology & coverage
Management-only analysis. All 2 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.