Financial Trends -- 5/10
Deere is navigating a multi-year agricultural equipment downturn, with total net sales declining
from ~$61B (FY2023) to ~$51.7B (FY2024, -15.6%) to ~$45.7B (FY2025, -11.7%). The rate of decline
is decelerating and revenue has inflected to positive YoY growth as of FQ4 FY2025 (+11.2%) and
FQ1 FY2026 (+13.0%). Operating margins have compressed from 22%+ peak to 8-13% range, and EPS
continues to decline YoY at a moderating pace. FCF remains solidly positive on a full-year basis
(~$5.1B in FY2025). Two of three equipment segments have returned to growth, but PPA (the largest)
is still guided down 5-10% for FY2026. Equipment debt rose +22% while revenue fell, triggering a
-1 penalty. Base score 6 adjusted to 5 after penalty.
Weight: 25%
FY2025 Revenue
$45.7B
-11.7% YoY | Quarterly inflecting positive
FY2025 Diluted EPS
$18.50
-27.8% YoY | FY2026E guided ~$16
FY2025 Op Margin
13.1%
-430bps YoY | Still above prior cycle trough
FY2025 Equip FCF
$5.1B
-3.4% YoY | Remarkably resilient
Revenue Trajectory (Annual, USD B)
Cyclical trough confirmed -- revenue declining but bottoming.
Annual revenue fell from ~$61B (FY2023) to ~$45.7B (FY2025, -25% cumulative) as the ag equipment
cycle turned down. However, quarterly YoY growth has inflected positive: +11.2% in FQ4 FY2025 and
+13.0% in FQ1 FY2026. Management explicitly stated FY2026 marks the cycle bottom for large ag.
FY2026E consensus ~$48.5B implies modest recovery; FY2027E ~$53B as the cycle turns.
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Revenue ($M) | $61,000M | $51,700M | $45,700M |
| YoY Growth | — | -15.6% | -11.7% |
FY2026E ~$48.5B, FY2027E ~$53B consensus. FYE October 31. Data sourced from Daloopa and DE earnings transcripts.
Quarterly Revenue Trajectory (USD M)
YoY revenue growth inflected from -30.2% trough to +13.0%.
Revenue YoY hit its worst point at FQ1 FY2025 (-30.2%) and has progressively improved each quarter:
-16.2%, -8.6%, +11.2%, +13.0%. FQ1 is seasonally the weakest quarter (Nov-Jan). The inflection
to positive growth in FQ4 FY2025 and FQ1 FY2026 confirms the cycle is bottoming. C&F (+33.9%)
and SAT (+24.0%) are leading the recovery; PPA (+3.1%) is lagging but improving.
DE fiscal year ends October 31. FQ1=Nov-Jan, FQ2=Feb-Apr, FQ3=May-Jul, FQ4=Aug-Oct. Data sourced from Daloopa.
Revenue by Segment (Quarterly, USD M)
Segment recovery led by C&F (+33.9%) and SAT (+24.0%); PPA lagging (+3.1%).
PPA (~50% of equipment revenue) saw its trough at FQ1 FY2025 (-36.7% YoY) and is only modestly positive,
guided down 5-10% for full FY2026 as NA large ag remains subdued. SAT (~20%) returned to growth in
FQ4 FY2025 and accelerated to +24.0%, benefiting from dairy/livestock/turf demand. C&F (~20%) is the
strongest recovery segment at +33.9%, driven by earthmoving, infrastructure, and data center construction.
Order book up 50%+ sequentially. Financial Services (~10%) is stable.
| Metric | FQ2 24 | FQ3 24 | FQ4 24 | FQ1 25 | FQ2 25 | FQ3 25 | FQ4 25 | FQ1 26 |
|---|---|---|---|---|---|---|---|---|
| PPA ($M) | $6,580M | $5,100M | $4,310M | $3,070M | $5,230M | $4,270M | $4,740M | $3,160M |
| PPA YoY | -15.9% | -25.1% | -38.2% | -36.7% | -20.5% | -16.2% | 10.1% | 3.1% |
| SAT ($M) | $3,190M | $3,050M | $2,310M | $1,750M | $2,990M | $3,030M | $2,460M | $2,170M |
| SAT YoY | -23.1% | -18.3% | -25.5% | -27.9% | -6.0% | -0.9% | 6.5% | 24.0% |
| C&F ($M) | $3,840M | $3,240M | $2,660M | $1,990M | $2,950M | $3,060M | $3,380M | $2,670M |
| C&F YoY | -6.5% | -13.5% | -28.8% | -37.9% | -23.3% | -5.4% | 27.0% | 33.9% |
| Fin Svcs ($M) | $1,400M | $1,490M | $1,520M | $1,470M | $1,390M | $1,420M | $1,550M | $1,380M |
PPA guided down 5-10% FY2026; SAT and C&F each guided up ~15%. Data sourced from Daloopa.
Margin Trends (Quarterly)
Margins compressing sharply from peak -- tariffs adding ~$1.2B headwind in FY2026.
Equipment gross margin compressed from the 32-33% range in FY2023 to 21.4% in FQ1 FY2026 (seasonally weak).
Operating margin fell from ~20% peak to 8.0% in FQ1 FY2026. Key headwinds: tariffs (~$1.2B in FY2026),
unfavorable sales mix (less large ag, more lower-margin products), and competitive pricing pressure.
However, the rate of YoY margin compression is narrowing: -870bps at trough (FQ1 FY2025) vs -130bps
in FQ1 FY2026. FY2025 equip op margins of 12.6% exceeded the 2016 cycle trough by 450bps+, reflecting
structural improvement under the Smart Industrial strategy.
| Metric | FQ2 24 | FQ3 24 | FQ4 24 | FQ1 25 | FQ2 25 | FQ3 25 | FQ4 25 | FQ1 26 |
|---|---|---|---|---|---|---|---|---|
| Total Op Margin | 20.3% | 17.5% | 13.0% | 9.3% | 18.1% | 13.0% | 10.9% | 8.0% |
| PPA Op Margin | 25.1% | 22.8% | 15.3% | 11.0% | 22.0% | 13.6% | 12.7% | 4.4% |
| SAT Op Margin | 17.9% | 16.2% | 10.1% | 7.1% | 19.2% | 16.0% | 1.0% | 9.0% |
| C&F Op Margin | 17.4% | 13.8% | 12.3% | 3.3% | 12.9% | 7.7% | 10.3% | 5.1% |
| Gross Margin (Equip) | 32.7% | 31.0% | 29.1% | 25.9% | 31.8% | 26.8% | 24.9% | 21.4% |
FQ1 FY2026 PPA margin of 4.4% intentionally depressed by lean NA large ag production. Tariffs ~$1.2B FY2026. Data sourced from Daloopa.
Diluted EPS Trajectory (Quarterly)
EPS declining every quarter YoY -- pace moderating from -48.8% trough.
Diluted EPS peaked at the FY2023 cycle high and has declined every quarter since: -11.6%, -38.3%,
-44.9%, -48.8% (trough at FQ1 FY2025), then -22.2%, -24.5%, -13.6%, -24.1%. FQ4 FY2025 showed
the narrowest decline at -13.6%. FQ1 FY2026 was worse (-24.1%) due to intentionally lean large ag
production. Full-year FY2025 EPS: $18.50 (-27.8% YoY). FY2026 guided at ~$16/share midpoint,
-13.5% YoY -- consistent with bottoming. Consensus FY2026E ~$16, FY2027E ~$22 (recovery).
| Metric | FY2024 | FY2025 | FY2026E | FY2027E |
|---|---|---|---|---|
| Diluted EPS | $25.6 | $18.5 | — | — |
| Consensus Est | — | — | $16.0 | $22.0 |
| YoY Growth | — | -27.8% | -13.5% | — |
FY2026E EPS ~$16 (mgmt guidance midpoint $4.5-5.0B NI / ~270M shares). FY2027E ~$22 consensus. Data sourced from Daloopa.
Free Cash Flow -- Equipment Operations (Quarterly, USD M)
Full-year FCF remarkably resilient at ~$5.1B despite revenue down 12%.
FCF is highly seasonal -- FQ1 is always negative due to working capital (dealer stocking). On a
full-year basis, FY2025 equipment operations FCF of ~$5.1B was the best outside the 2021-2024 peak
cycle, demonstrating structural cash generation improvement. FY2024 equip FCF was ~$5.3B, so
the -3.4% decline is modest relative to the -11.7% revenue decline. FY2026 equip CFO guidance:
$4.5-5.5B (midpoint $5.0B), suggesting continued stability.
| Metric | FY2024 | FY2025 |
|---|---|---|
| Equip FCF ($M) | $5,300M | $5,100M |
| FCF YoY | — | -3.4% |
FY2026 equip CFO guidance: $4.5-5.5B. FQ1 seasonal negativity is normal. Data sourced from Daloopa.
Share Count and Buybacks
Share count declining steadily (-8.6% cumulative), but buyback pace has slowed.
Diluted shares fell from 296.5M to 270.9M over 3 years -- no dilution. However, buyback pace slowed
dramatically: repurchases were $2.55B in FQ4 FY2023 peak but dropped to just $2M in FQ4 FY2025
(paused due to uncertainty). Buybacks resumed in FQ1 FY2026 at $302M. The -0.5% YoY share reduction
in the latest quarter is well below the prior -6.3% pace. No dilution penalty applies, but the reduced
buyback pace removes a tailwind for EPS growth going forward.
| Metric | FQ2 23 | FQ2 24 | FQ2 25 | FQ1 26 |
|---|---|---|---|---|
| Diluted Shares (M) | 296.5M | 277.9M | 271.8M | 270.9M |
| YoY Change | — | -6.3% | -2.2% | -0.5% |
Buybacks: $2.55B peak (FQ4 FY2023), $2M (FQ4 FY2025), $302M (FQ1 FY2026). Data sourced from Daloopa.
Equipment Operations Debt (USD M)
Equipment debt grew +22% YoY while revenue declined -- penalty triggered.
Equipment operations debt increased from $7.51B (FQ4 FY2024) to $9.17B (FQ4 FY2025), a +22.1% increase
primarily in long-term borrowings. This occurred while revenue declined -11.7%. The increase was
related to voluntary pension contributions ($520M in FQ1 FY2025) and maintaining liquidity. Deere
maintains a mid-single-A credit rating. This debt-growing-faster-than-revenue pattern triggered a
-1 penalty in the scoring framework.
| Metric | FQ4 23 | FQ4 24 | FQ4 25 | FQ1 26 |
|---|---|---|---|---|
| ST Borrowings ($M) | $1,230M | $911M | $414M | $366M |
| LT Borrowings ($M) | $7,210M | $6,600M | $8,760M | $8,900M |
| Total Equip Debt ($M) | $8,440M | $7,510M | $9,170M | $9,260M |
Equip debt +22.1% YoY at FQ4 FY2025 while revenue -11.7%. Mid-single-A credit rating maintained. Data sourced from Daloopa.
Acceleration / Deceleration Analysis
| Signal | Detail | Direction |
|---|---|---|
| Revenue Growth | Inflected from -30.2% trough (FQ1 FY2025) to +13.0% (FQ1 FY2026) | Inflected Positive |
| C&F Segment | Strongest recovery at +33.9% YoY; order book at highest since May 2024 | Accelerating |
| SAT Segment | Returned to growth FQ4 FY2025 (+6.5%), accelerated to +24.0% | Accelerating |
| PPA Segment | Only +3.1% YoY; NA large ag still subdued, guided down 5-10% full year | Bottoming |
| Operating Margin | Down from 20%+ to 8-13%; YoY compression narrowing (-870bps to -130bps) | Compressing (narrowing) |
| EPS Growth | Still declining every quarter YoY; FY2026 guided -13.5% | Declining (moderating) |
| Free Cash Flow | Full-year ~$5.1B, remarkably stable; only -3.4% YoY on -12% revenue | Resilient |
| Share Count | Declining steadily (-8.6% cumulative); buyback pace slowed dramatically | Positive but slowing |
| Equipment Debt | +22% YoY at FQ4 FY2025 while revenue -12%; penalty triggered | Growing |
Score Derivation
| Factor | Assessment | Impact |
|---|---|---|
| Base Score | Revenue inflected positive, 2 of 3 equip segments growing, FCF resilient at ~$5.1B, share count declining, structural margin improvement vs prior cycles (+450bps vs 2016 trough) | 6.0 |
| Debt Penalty | Equipment operations debt +22.1% YoY while revenue -11.7% -- debt growing faster than revenue | -1.0 |
| Negative FCF Penalty | Full-year FCF positive ($5.3B FY2024, $5.1B FY2025); FQ1 seasonal negativity is normal | None |
| Share Dilution | Share count declining -8.6% cumulative over 3 years; no dilution | None |
| Op Income vs Revenue | Revenue still declining full-year; not applicable. FQ1 FY2026 revenue +13% but op income lower reflects lean production | None |
| Total Penalties | Only debt penalty applies (-1) | -1.0 |
| Final Score | Base 6.0 minus 1.0 debt penalty | 5/10 |
Data sourced from Daloopa and Deere earnings transcripts (FQ1 FY2025 through FQ1 FY2026). FYE October 31.