Trim DE 25-30% before Q2 FY26; $585 hard stop, $645 re-entry trigger
Trim DE to 70-75% of model weight (reduce 25-30%) ahead of Q2 FY26 print. Do NOT initiate new positions at $609 — the bear's $550-570 zone (200 SMA area) is the rational re-entry level. Layer the trim over 3-5 sessions rather than executing in a single block. Stage stop discipline around two anchors: $645 as bear-case invalidation (re-entry trigger if reclaimed post-print), and $585 as hard close-only stop on the residual to confirm structural breakdown if catalyst disappoints. The $25-30% trim captures roughly two-thirds of any post-print upside while still meaningfully reducing downside — the asymmetric sweet spot between the aggressive analyst's 25% (too light) and the conservative analyst's 40-50% (excessive given intact structural uptrend). Skip the put overlay; position sizing IS the hedge at this magnitude. Reassess 30 days post-earnings based on forward guidance tone and FCF trajectory.
| Position | Action |
|---|---|
| Standard trim ahead of Q2 FY26 catalyst | Reduce DE exposure 25-30% to 70-75% of model weight |
| Clean beat-and-raise with positive y/y revenue | Reassess toward Hold/Overweight; trim further if multiple expands to 28x+ |
| In-line print with cautious guidance | Maintain Underweight; let $585 stop govern |
| Miss with guidance cut (AGCO-style) and close below $585 on volume | Downgrade to Sell; exit residual; re-enter at $550-570 zone on stabilization |
| Post-print close above $645 | Reclaim prior high; kill lower-high distribution thesis; use as re-entry trigger on residual |
Deere is a technology platform in early-cycle recovery, not a cyclical farm equipment maker; Q1 FY26 revenue inflection, 29% forward earnings growth, and a 26.80x forward P/E on an 18.3% ROE business justify buying the current pullback.
| Indicator | Value | Signal |
|---|---|---|
| 10 EMA | 611.75 | bearish |
| 50 SMA | 597.46 | bullish |
| 200 SMA | 550.15 | bullish |
| MACD | 4.54 | bearish |
| MACD Signal | 4.80 | bearish |
| MACD Histogram | -0.25 | bearish |
| RSI (14) | 51.20 | neutral |
| Bollinger Upper Band | 637.07 | neutral |
| Bollinger Middle Band | 606.79 | neutral |
| Bollinger Lower Band | 576.51 | neutral |
| ATR | 17.89 |
This report is AI-generated for informational and educational purposes only and is not investment advice or a recommendation to buy or sell any security. Full disclaimer.
When: Confirmed close below $597 with widening volume
Then: Justify further trimming of residual position
Q1 FY2026 was the earnings inflection point with highest revenue in the trailing twelve months
↩ rebuts: “Bear's downcycle deepening narrative”
· concedes: UAW contract overhang is a near-term binary catalyst risk that needs monitoring; TTM P/E of 34.6x is rich relative to cycle trough earnings; Current 86% no-cut pricing means any further hawkish surprises could pressure multiples near-term
DE at $609 with 26.8x forward P/E is a peak-multiple setup with binary near-term earnings risk, hostile macro conditions (oil re-acceleration, Fed on hold), and a $59.2B leveraged credit portfolio — risk/reward is unfavorable; patience for $550-$570 entry is warranted.
· concedes: Interest coverage and ROE remain adequate in the near term; Q1 FY26 beat was real and represents participation in early recovery; Deere's integrated tech platform (See & Spray) is genuinely differentiated; The bull's long-term thesis about cycle trough formation may still prove correct over 12-18 months
→ vs neutral: Mixed sentiment score of 5.2 with low confidence is paralysis, not analysis; two of three sentiment channels failing to return data indicates absence of buyers not neutrality
→ vs conservative: Waiting for 597-606 zone is catching a falling knife after trend breaks, not buying a dip; 50 SMA at 597 is a breakdown level not a higher-probability entry
→ vs neutral: DCF models are sensitive to terminal growth assumptions and discount rates; in a hawkish environment they tell you almost anything is undervalued, which is model fit to bull thesis not an edge
→ vs conservative: Beta of 0.90 is a statistical average over full cycle, not a guarantee DE cannot drop 12% in a quarter; in hawkish Fed environment with oil re-accelerating and farmer margins under pressure, drawdown conditions are ripening
→ vs conservative: Trend structure of 50 SMA above 200 SMA is a lagging indicator telling what already happened, not what's coming
→ vs neutral: Q1 FY26 EPS of 6.55 showing trough is behind us is false; if truly a cyclical recovery, sequential earnings would exceed prior peaks not approach them
| neutral |
| Swing High (07-28) | 639.84 | neutral |
| RSI Peak (06-25) | 70.29 | neutral |
| RSI Peak (06-30) | 67.38 | neutral |
| MACD Peak (07-06) | 16.57 | neutral |
Support: 606.79 · 597.46 · 576.51 · 550.15 | Resistance: 637.07 · 639.84 · 611.75
DE is in a confirmed medium- and long-term uptrend with both the 50 SMA (597.46) and 200 SMA (550.15) rising and price well above them. The late-July rally pushed DE to a swing high of 639.84 before pulling back; current price (609.28) sits just below the 10 EMA (611.75) with neutral RSI (51.20) and slightly negative MACD histogram (-0.25), indicating short-term consolidation rather than trend reversal. Key support lies at the 50 SMA (597.46) with the Bollinger lower band at 576.51; resistance is at the Bollinger upper band (637.07). The recommended action is HOLD—wait for a pullback to the 597–606 zone for a better risk/reward entry, with a hard stop below 595.
Market Cap
$164.47 B
52-Week High
$674.19
52-Week Low
$433.00
50-Day Moving Average
$596.69
200-Day Moving Average
$551.82
P/E Ratio (TTM)
34.56
Forward P/E
26.80
PEG Ratio
1.43
Price to Book (P/B)
6.00
Dividend Yield
1.04%
Beta
0.90
EPS (TTM)
$17.63
Forward EPS
$22.73
Revenue (TTM)
$47.34 B
Revenue (FY2022)
$51.28 B
Revenue (FY2023)
$60.25 B
Revenue (FY2024)
$50.52 B
Revenue (FY2025)
$44.67 B
Revenue (Q1'25)
$9.34 B
Revenue (Q2'25)
$12.53 B
Revenue (Q3'25)
$11.78 B
Revenue (Q4'25)
$12.09 B
Revenue (Q1'26)
$13.09 B
Net Income (TTM)
$4.78 B
Net Income (FY2022)
$7.13 B
Net Income (FY2023)
$10.17 B
Net Income (FY2024)
$7.10 B
Net Income (FY2025)
$5.03 B
Net Income (Q1'25)
$656 M
Net Income (Q2'25)
$1,804 M
Net Income (Q3'25)
$1,289 M
Net Income (Q4'25)
$1,065 M
Net Income (Q1'26)
$1,773 M
Diluted EPS (TTM)
$17.63
Diluted EPS (FY2022)
$23.28
Diluted EPS (FY2023)
$34.63
Diluted EPS (FY2024)
$25.62
Diluted EPS (FY2025)
$18.50
Diluted EPS (Q1'25)
$2.42
Diluted EPS (Q2'25)
$6.64
Diluted EPS (Q3'25)
$4.75
Diluted EPS (Q4'25)
$3.93
Diluted EPS (Q1'26)
$6.55
Operating Margin (TTM)
17.48%
Operating Margin (FY2022)
17.6%
Operating Margin (FY2023)
24.2%
Operating Margin (FY2024)
22.6%
Operating Margin (FY2025)
18.8%
Net Profit Margin (TTM)
10.10%
Net Profit Margin (FY2022)
13.9%
Net Profit Margin (FY2023)
16.9%
Net Profit Margin (FY2024)
14.1%
Net Profit Margin (FY2025)
11.3%
Gross Margin (TTM)
25.97%
EBITDA (TTM)
$8.61 B
EBITDA Margin (TTM)
18.2%
EBIT (TTM)
$9.43 B
Return on Equity (TTM)
18.35%
Return on Assets (TTM)
3.83%
Cash and ST Investments
$9.34 B
Receivables (incl. finance)
$59.17 B
Inventory
$8.19 B
Total Current Assets
$76.69 B
Net PP&E
$15.55 B
Goodwill and Intangibles
$5.49 B
Total Assets
$107.00 B
Accounts Payable and Accrued Expenses
$10.48 B
Current Debt and Lease
$21.90 B
Long-Term Debt and Lease
$42.26 B
Total Liabilities
$79.54 B
Total Stockholders' Equity
$27.41 B
Current Ratio
2.21
Debt-to-Equity
2.34x
Working Capital
$42.8 B
Tangible Book Value
$21.92 B
Net Debt
$55.88 B
Interest Expense (TTM)
$3.17 B
Interest Coverage Ratio
2.97x
Operating Cash Flow (FY2022)
$4.70 B
Operating Cash Flow (FY2023)
$8.59 B
Operating Cash Flow (FY2024)
$9.23 B
Operating Cash Flow (FY2025)
$7.46 B
Operating Cash Flow (Q1'26)
$1.93 B
CapEx (FY2022)
$3.79 B
CapEx (FY2023)
$4.47 B
CapEx (FY2024)
$4.80 B
CapEx (FY2025)
$4.23 B
Free Cash Flow (FY2022)
$0.91 B
Free Cash Flow (FY2023)
$4.12 B
Free Cash Flow (FY2024)
$4.43 B
Free Cash Flow (FY2025)
$3.23 B
Free Cash Flow (TTM)
$1.10 B
Free Cash Flow (Q1'25)
$-1.58 B
Free Cash Flow (Q2'25)
$0.68 B
Free Cash Flow (Q3'25)
$1.84 B
Free Cash Flow (Q4'25)
$2.63 B
Free Cash Flow (Q1'26)
$0.87 B
Dividends Paid (FY2022)
$1.31 B
Dividends Paid (FY2023)
$1.43 B
Dividends Paid (FY2024)
$1.61 B
Dividends Paid (FY2025)
$1.72 B
Buybacks (FY2022)
$3.60 B
Buybacks (FY2023)
$7.22 B
Buybacks (FY2024)
$4.01 B
Buybacks (FY2025)
$1.14 B
Payout Ratio
~36%
Cost of Revenue (TTM)
~$35.1 B
SG&A (TTM)
~$4.24 B
R&D (TTM)
~$2.31 B
Interest Expense Q1'26
$712 M
Total Capitalization
$69.67 B
Strengths
Concerns
Deere & Company is a best-in-class cyclical industrial navigating the late stage of a deep agricultural equipment downcycle. Q1 FY2026 showed the strongest revenue ($13.09B) and net income ($1.77B) of the trailing five quarters, with EPS of $6.55 near the prior cycle peak, signaling a likely trough. Despite revenue contraction from FY2023's peak of $60.25B to FY2025's trough of $44.67B, the company maintains an 18.3% ROE, generates robust FCF (>$3B annually for three straight years), and is deleveraging (net debt down $2.4B YoY to $55.88B). The forward P/E of 26.8x implies ~29% earnings growth, but current P/E of 34.6x and P/B of 6.0x already price in a robust recovery. Suitable for long-term holders with a multi-year horizon; short-term traders should size positions carefully given rich multiples and commodity-cycle sensitivity.
Macro: Hawkish Fed hold fully priced through 2026 (86% zero cuts) with oil as the dominant macro variable — WTI central case $85/barrel with fat right tail on Hormuz disruption risk. Soft-landing baseline intact (8% US recession odds) supporting capex demand, but geopolitical risk premium rebuilding in crude creates input cost headwinds for DE. Dollar strength likely under higher-for-longer backdrop negative for US agricultural exports. Political tail risk elevated with Powell-institution removal bets rising sharply (+34.5pp WoW on September contract). FRED macro data unavailable due to missing API key.