Shares of Deere & Co. (DE) fell more than 6% Thursday after the farm and construction equipment giant trimmed its full-year profit outlook. This overshadowed better-than-expected fiscal third-quarter earnings, as investors reacted to concerns over slowing demand and rising costs.
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The company reported earnings per share of $4.75 on $10.4 billion in equipment sales, beating Wall Street estimates of $4.58 and $10.3 billion, respectively. However, both figures marked a steep drop from last year’s $6.29 EPS and $11.4 billion in sales.
New Guidance Reflects Caution
The company now expects 2025 net income between $4.75 billion and $5.25 billion, down from the prior range of $4.75 billion to $5.50 billion. Also, the midpoint of $5 billion is well below last year’s $7.1 billion. Further, Deere expects $500 million in tariff-related costs this year.
The revision comes amid falling equipment sales, margin pressure, and persistent inventory overhang in used machinery.
Importantly, Deere expects U.S. and Canada construction equipment demand to fall about 10%, with compact equipment demand flat to down 5%.
Farmers Pull Back amid Low Crop Prices
Sales declined across Deere’s core businesses, with construction equipment posting its third straight quarter of pricing weakness. Operating profit in that division fell nearly 50% due to higher production costs and unfavorable pricing.
Agricultural equipment also saw lower shipment volumes, driven by cautious farmer spending amid falling crop prices and tariff uncertainty. It is worth noting that corn prices have averaged around $4 per bushel over the past year, down from $6.50 in 2022, leaving farmers with less capital to invest in new equipment.
Is DE a Good Stock to Buy?
Turning to Wall Street, DE stock has a Moderate Buy consensus rating based on nine Buys and eight Holds assigned in the last three months. At $555.25, the average Deere stock price target implies a 15.46% upside potential.
