DE
DEERE & CONYSEValuation snapshot
Above bull casePrice is above even the bull case.
Price as of Sep 4, 2026 · Valuation Sep 6, 2026
What drives DE's base case?
base-case thesisDeere's latest results show that stronger small-equipment and construction demand is offsetting continued weakness in large farm machinery. Management believes the farm-equipment cycle is near its bottom, and improving used-machine inventories support a gradual replacement recovery. This case assumes that recovery restores some factory efficiency and pricing power but remains well below the exceptional 2023 conditions.
What shapes the assumptions
Nine-month revenue grew 7 percent
Company revenue growth
Raises revenue growth
Small Agriculture and Turf sales grew 16 percent year to date
Equipment segment mix
Raises operating margin
Large-ag units remain forecast down 15 to 20 percent
Production and Precision Agriculture sales
Lowers revenue growth
Capital spending remains near 3 percent of recent annual revenue
Capital intensity
Informs reinvestment
Each driver links a business metric to the forecast assumption it shapes — the basis for this case, not investment advice.
Why the gap?
The market is pricing this as if revenue grows 30.9% a year. Over the last 5 years it grew 2.5% a year — so the price assumes far more than it has delivered.
What else could explain it?›
- Or, holding growth steady
- the price is also consistent with a 41.2% operating margin, against the 15.0% assumed here.
- How confident is this estimate?
- Robustness 31.0/10 (Fragile) — some of any gap is our own uncertainty rather than disagreement.
- What would change the answer?
- Which assumption this valuation swings on, and by how much.
Many combinations of assumptions reproduce the same price. These are ways to read what the market might be expecting, not the market's actual view. How this is worked out
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
View details
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
Three independently researched cases generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Company value drivers
Ranked operating metrics and the valuation assumptions they influence.
1. Equipment operations annual net sales
Annual sales from Deere's three equipment segments measure the replacement cycle and the revenue base that generates industrial profit.
$39B
reported2. Equipment segments annual operating margin
Combined annual segment profit divided by combined equipment sales tracks pricing, product mix, and factory utilization across Deere's industrial businesses.
12.6%
derived4. Annual cash capital expenditure as a share of revenue
Cash purchases of property and equipment relative to annual revenue indicate how much investment Deere needs to maintain and expand its asset base.
3.0%
derived5. Annual consolidated effective tax rate
Annual tax expense divided by pretax income tracks the cash-flow burden that taxes are likely to impose after temporary items normalize.
20.1%
derivedBase inputs from financials
source period →Base revenue (TTM)
$48B
Diluted shares
270,700,000
Net cash
-$28.6B
Bear
low confidence$54.58
IV / share
-92.1% vs $694.41
- Explicit cash flows
- $39.12
- Terminal value
- $120.99
- Net cash
- -$105.54
- Intrinsic value / share
- $54.58
221.7% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth-3.0% → 1.0% → 2.0% → 2.5% → 2.5%medium
How derived: Revenue fell in both 2024 and 2025 and large-ag markets remain weak, so this path assumes the recent quarterly recovery fades before growth settles near mature-industry levels.
Why this confidence: Current segment guidance and nine-month results ↑, Agricultural-cycle timing beyond one year is inherently uncertain ↓
Measured by
Evidence for
- Deere forecast fiscal-2026 large-ag industry unit sales down 0.15 to 0.20 in the United States and Canada and South America.[Deere Q3 2026 results]· primary
Evidence against
- Total revenue grew 0.05 in the third quarter and 0.07 over the first nine months of fiscal 2026, while management described 2026 as the likely bottom of the agricultural-equipment cycle.[Deere Q3 2026 results]· primary
Operating margin12.0%medium
How derived: The equipment businesses earned a derived 0.131 margin during the first nine months of 2026, and this case assumes persistent large-ag weakness and production costs pull profitability modestly below that level.
Why this confidence: Reported segment sales and profit permit a direct margin calculation ↑, Future product mix and cycle-related factory utilization are uncertain ↓
Measured by
Evidence for
- Production and Precision Agriculture's third-quarter margin was 0.132, with lower shipment volume and higher production costs weighing on profit.[Deere Q3 2026 results]· primary
Evidence against
- Small Agriculture and Turf earned a 0.184 third-quarter margin, and Construction and Forestry improved to 0.121 from 0.077.[Deere Q3 2026 results]· primary
Tax rate26.0%high
How derived: Management guided to a 0.24 to 0.26 equipment-operations tax rate for 2026, and the bear case uses the top of that range because it assumes fewer favorable discrete items.
Why this confidence: Explicit current-year management range ↑, Discrete tax items can move the reported rate ↓
Measured by
- Annual consolidated effective tax rate20.1%derived
Evidence for
- Deere's fiscal-2026 equipment-operations effective-tax-rate guidance was 0.24 to 0.26.[Deere Q3 2026 earnings slides]· primary
Evidence against
- The reported fiscal-2025 consolidated effective tax rate was approximately 0.201, derived from tax expense of 1259 and pretax income of 6257 million dollars.[Deere FY2025 Form 10-K]· primary
Reinvestment rate38.0%low
How derived: With annual capital spending around 1.3 billion dollars and continued technology investment, this case retains 0.38 of after-tax operating profit to cover capital expenditure, working capital, and inefficient low-growth investment.
Why this confidence: Capital-spending guidance is explicit ↑, Working-capital investment and the conversion from capital spending to a share of after-tax profit require estimation ↓
Measured by
Evidence for
- Deere expected approximately 1.3 billion dollars of fiscal-2026 equipment-operations capital expenditure and slightly higher research and development expense.[Deere Q3 2026 earnings slides]· primary
Evidence against
- Fiscal-2025 cash capital expenditure was only about 0.030 of revenue, indicating that the existing manufacturing base does not require unusually high capital intensity.[Deere FY2025 Form 10-K]· estimate
Terminal growth2.0%low
How derived: Because Deere operates in mature cyclical equipment markets and technology subscriptions were not yet a significant revenue source in 2025, this case limits perpetual growth to 0.02.
Why this confidence: Mature-industry and current revenue-mix disclosures ↑, A perpetual assumption extends far beyond observable guidance ↓
Measured by
Evidence for
- Deere disclosed that software-as-a-service products did not represent a significant percentage of 2025 revenue.[Deere FY2025 Form 10-K]· primary
Evidence against
- Deere said deeper technology integration is a persistent market trend and that customers continue adopting equipment and technology intended to raise productivity.[Deere FY2025 Form 10-K]· primary
Base
low confidence$185.35
IV / share
-73.3% vs $694.41
- Explicit cash flows
- $63.75
- Terminal value
- $227.14
- Net cash
- -$105.54
- Intrinsic value / share
- $185.35
122.5% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth6.0% → 6.5% → 5.5% → 4.5% → 4.0%medium
How derived: Starting from 0.05 quarterly and 0.07 nine-month revenue growth, this path assumes a measured agricultural replacement-cycle recovery that peaks early and then normalizes.
Why this confidence: Current growth, order-book, and inventory evidence ↑, The exact speed of a cyclical recovery is uncertain ↓
Measured by
Price implies: 30.9% vs our 5.3% — one of several sets that fit this price
Evidence for
- Total revenue increased 0.05 in the third quarter and 0.07 over the first nine months of 2026; management also cited improving used-equipment inventories and early order trends.[Deere Q3 2026 results]· primary
Evidence against
- Production and Precision Agriculture sales were down 0.06 in the third quarter, and fiscal-2026 large-ag industry demand was still forecast to decline sharply.[Deere Q3 2026 results]· primary
Operating margin15.0%medium
How derived: The equipment businesses produced a derived 0.131 margin in the first nine months of 2026, so this case assumes moderate volume leverage and mix normalization lift profitability to 0.15 without returning to the 2023 peak.
Why this confidence: Multiple reported segments show current operating leverage ↑, Target profitability depends on uncertain future mix and utilization ↓
Measured by
Price implies: 41.2% vs our 15.0% — one of several sets that fit this price
Evidence for
- Small Agriculture and Turf's third-quarter margin reached 0.184, while Construction and Forestry improved to 0.121 as volume and price realization improved.[Deere Q3 2026 results]· primary
Evidence against
- The derived combined equipment-segment margin fell from about 0.219 in 2023 to 0.126 in 2025, demonstrating substantial downside when volumes contract.[Deere FY2025 Form 10-K]· estimate
Tax rate25.0%high
How derived: The midpoint of management's 0.24 to 0.26 equipment-operations tax guidance provides a normalized rate that avoids relying on temporary tax benefits.
Why this confidence: Management guidance and year-to-date results closely agree ↑, Future tax-law and discrete-item changes remain possible ↓
Measured by
- Annual consolidated effective tax rate20.1%derived
Evidence for
- Management's fiscal-2026 equipment-operations effective-tax-rate range was 0.24 to 0.26, centered on 0.25.[Deere Q3 2026 earnings slides]· primary
Evidence against
- The first nine months of 2026 produced a consolidated effective rate of approximately 0.248, but quarterly and segment tax rates can differ from the normalized equipment-operations rate.[Deere Q3 2026 results]· estimate
Reinvestment rate32.0%low
How derived: Deere's recent capital spending has been roughly 0.025 to 0.032 of revenue, and retaining 0.32 of after-tax operating profit allows for that spending, working capital, and continuing technology development during a moderate recovery.
Why this confidence: Three years of comparable capital-spending history ↑, The model also requires an estimate of working-capital reinvestment ↓
Measured by
Evidence for
- Cash capital expenditure equaled approximately 0.024, 0.032, and 0.030 of revenue in fiscal 2023, 2024, and 2025, respectively.[Deere FY2025 Form 10-K]· estimate
Evidence against
- Deere forecast only about 1.3 billion dollars of fiscal-2026 equipment-operations capital spending, below fiscal-2024 cash capital expenditure.[Deere Q3 2026 earnings slides]· primary
Terminal growth2.5%low
How derived: This rate places Deere modestly above the bear case because global food demand, replacement needs, and technology adoption can support growth, while its mature and cyclical markets prevent assuming a high perpetual rate.
Why this confidence: Long-run food, infrastructure, and technology demand are economically durable ↑, Perpetual growth cannot be validated from near-term guidance ↓
Measured by
Evidence for
- Deere identified worldwide demand for food and renewable energy and deeper integration of technology into equipment as persistent long-term demand influences.[Deere FY2025 Form 10-K]· primary
Evidence against
- Annual revenue declined 0.156 in 2024 and 0.117 in 2025, illustrating that equipment replacement cycles can overwhelm structural demand for extended periods.[Deere FY2025 Form 10-K]· primary
Bull
low confidence$365.58
IV / share
-47.4% vs $694.41
- Explicit cash flows
- $92.74
- Terminal value
- $378.37
- Net cash
- -$105.54
- Intrinsic value / share
- $365.58
103.5% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth11.0% → 10.0% → 8.0% → 6.5% → 5.0%low
How derived: This path assumes management is correct that 2026 is the cycle bottom and that large-ag replacement demand joins the already strong Small Agriculture and Turf and Construction and Forestry recoveries.
Why this confidence: Early order, inventory, and non-large-ag segment trends ↑, Double-digit recovery requires an unconfirmed large-ag cycle turn ↓
Measured by
Evidence for
- Small Agriculture and Turf and Construction and Forestry sales increased 0.12 and 0.18 in the third quarter, respectively, while management cited improving used-equipment inventories and early order demand.[Deere Q3 2026 results]· primary
Evidence against
- Production and Precision Agriculture sales remained down 0.06 in the third quarter, and management forecast an approximately 0.10 full-year decline for that segment.[Deere Q3 2026 results]· primary
Operating margin18.0%low
How derived: This case assumes a broad volume recovery lifts the current derived equipment margin of 0.131 toward, but not fully back to, the approximately 0.219 achieved in fiscal 2023.
Why this confidence: Historical results demonstrate high-teen and better margins at stronger volumes ↑, Achieving the target requires both cycle recovery and favorable mix ↓
Measured by
Evidence for
- Small Agriculture and Turf achieved a 0.184 third-quarter margin, showing that high-teen profitability is attainable when volume and price realization are favorable.[Deere Q3 2026 results]· primary
Evidence against
- Production and Precision Agriculture's third-quarter margin was only 0.132, and its fiscal-2026 margin guidance was 0.11 to 0.12.[Deere Q3 2026 earnings slides]· primary
Tax rate24.0%medium
How derived: The bull case uses the low end of management's 0.24 to 0.26 equipment-operations tax range, assuming geographic mix and available tax benefits remain favorable.
Why this confidence: Value is anchored to explicit management guidance ↑, It selects the favorable endpoint and quarterly rates are volatile ↓
Measured by
- Annual consolidated effective tax rate20.1%derived
Evidence for
- A 0.24 tax rate is explicitly within Deere's fiscal-2026 equipment-operations guidance range.[Deere Q3 2026 earnings slides]· primary
Evidence against
- The third-quarter consolidated tax provision of 529 on pretax income of 1882 million dollars implied a substantially higher quarterly rate of approximately 0.281.[Deere Q3 2026 results]· estimate
Reinvestment rate26.0%low
How derived: Although growth accelerates, this case assumes recovery uses existing manufacturing capacity efficiently and technology raises returns, allowing reinvestment to remain near recent capital-spending needs at 0.26 of after-tax operating profit.
Why this confidence: Existing capacity and current capital-spending guidance support operating leverage ↑, A high-growth recovery could require more working capital than assumed ↓
Measured by
Evidence for
- Fiscal-2026 equipment-operations capital expenditure was forecast near 1.3 billion dollars, while Deere's existing property and equipment base exceeded 8 billion dollars.[Deere Q3 2026 results]· primary
Evidence against
- Deere continues substantial research and development for automation, autonomy, digitalization, and other technologies, and faster growth could require additional inventory and capacity.[Deere FY2025 Form 10-K]· primary
Terminal growth3.0%low
How derived: The bull case assumes global food, infrastructure, and precision-technology demand let Deere sustain 0.03 long-run growth, while still recognizing that it remains a mature equipment producer.
Why this confidence: Several durable end-market and technology drivers support growth ↑, The assumed benefit from recurring technology revenue is not yet demonstrated at scale ↓
Measured by
Evidence for
- Deere identified automation, autonomy, digitalization, lifecycle solutions, and service offerings as foundations for sustained growth toward 2030.[Deere FY2025 Form 10-K]· primary
Evidence against
- Software-as-a-service products were not a significant percentage of revenue in 2025, leaving Deere primarily exposed to cyclical equipment markets.[Deere FY2025 Form 10-K]· primary
Valuation robustness
reliability of the estimate, not a stock rating31 / 100 · Fragile
Formula v1.0.0. Higher means a more reliable estimate — not a recommendation.
Quality checks
Automated model-risk flags — warnings, not recommendations.
- 123% of the intrinsic value rests on the terminal value — a small change to terminal growth moves the valuation a lot.→ terminal growth
- The bear-to-bull range spans 168% of the base value — the outcome is highly uncertain.→ scenarios
- The reinvestment assumption is low-confidence.→ reinvestment
- The terminal growth assumption is low-confidence.→ terminal growth
Per-share economics
Business growth after changes in the diluted share count.
| Period | Revenue growth | FCF/share | FCF/share growth | Shares | Share growth |
|---|---|---|---|---|---|
| Q1 2025 | -30.2% | -5.45 | -20.6% | 272.3M | -3.1% |
| Q2 2025 | -16.2% | 5.51 | 2.4% | 271.8M | -2.2% |
| Q3 2025 | -8.6% | 9.58 | -8.1% | 271.4M | -1.5% |
| Q1 2026 | 13.0% | -4.23 | 22.4% | 270.9M | -0.5% |
| Q2 2026 | 4.7% | 6.41 | 16.5% | 270.8M | -0.4% |
| Q3 2026 | 4.9% | 7.18 | -25.0% | 270.7M | -0.3% |
Valuation history every run
History builds as the valuation is recalculated — this is the first recorded run.
Market inputs researched
The 10-year U.S. Treasury par yield on 2026-09-04 was 0.0478 and is used as the dollar risk-free rate.
The reported five-year equity beta was 0.91 as of 2026-09-05, providing a market-based estimate of Deere's systematic equity risk.
The July 2026 trailing-payout implied equity risk premium for the United States was 0.0418.
Deere shares closed at 693.53 dollars on 2026-09-04, the last completed trading session before the valuation date.
Generated 9/6/2026, 3:23:01 AM · pipeline v1.2.0