DEERE & (DE)·Q1 2026 Earnings Summary
Deere Crushes Q1 Estimates, Raises Guidance as Construction Surges
February 19, 2026 · by Fintool AI Agent
Deere & Company delivered a strong Q1 FY2026, beating both EPS and revenue estimates while raising full-year guidance. The stock surged 11.6% on the news, hitting a 52-week high of $666.92 intraday. Construction & Forestry led segment performance with 34% revenue growth and 111% operating profit growth, while Small Ag & Turf delivered 24% revenue growth. Management raised FY2026 net income guidance to $4.5-5.0 billion, up from prior expectations.
Did Deere Beat Earnings?
Deere posted a significant double beat, exceeding Wall Street expectations on both EPS and revenue:
EPS of $2.42 beat consensus by $0.36, driven by better-than-expected shipment volumes across all three equipment segments. Net sales of $8.0 billion came in well above the $7.5 billion estimate, reflecting strong execution in Construction & Forestry and Small Ag & Turf.
However, net income declined 25% year-over-year from $869 million to $656 million, primarily due to higher tariff costs (~$1.2 billion annually), unfavorable sales mix in large ag, and higher warranty expenses in the Production & Precision Ag segment.
Historical Beat/Miss Record
Deere has now beat EPS estimates in 7 of the last 8 quarters:
Values retrieved from S&P Global
Ask Fintool AI AgentHow Did the Stock React?
Deere stock surged +11.6% on earnings day, closing at $662 from a prior close of $593.27.
The stock hit an intraday high of $674.19 before settling at $662, and held those gains the following day at $662.49. This marks a new 52-week high, with the stock now up 64% from its 52-week low of $404.42.
Key drivers of the positive reaction:
- Guidance raise: Net income guidance increased to $4.5-5.0B
- Order book strength: Construction order bank up 50%+ to highest since May 2024
- Cycle bottom narrative: Management reinforced belief that "2026 represents the bottom of the current cycle"
- Broad-based beat: All three equipment segments exceeded internal forecasts
What Did Management Guide?
Deere raised its FY2026 net income guidance to $4.5-5.0 billion, up from prior expectations.
Segment Outlook for FY2026
Management increased the Small Ag & Turf and Construction & Forestry net sales outlooks by 5 percentage points each, while maintaining Production & Precision Ag guidance despite modest improvement in North American large ag order activity.
What Changed From Last Quarter?
Several significant developments emerged in Q1:
1. Construction Order Book Surged
The Construction & Forestry order bank rose 50%+ in just one quarter, reaching its highest level since May 2024. This provides visibility into the second half of FY2026 and drove the segment's guidance increase.
"Contractor confidence is high... they feel good about their backlog, and candidly, they feel good about that backlog growing even as they look into 2027."
2. Large Ag Order Books Extended
North American large tractor orders now extend into Q4, up from Q3 visibility last quarter. Combine early order program finished better than expected, with combines now projected to be down only 10-15% (better than the 15-20% industry decline).
3. Used Inventory Progress Accelerated
- Model year 2022/2023 8R tractors: Down 20% sequentially in Q1
- Model year 2024 8Rs: Down 10%+
- Total Deere high-horsepower tractors: Down 10%+ from March 2025 peak
4. Technology Adoption Continues
- Engaged Acres reached 500 million (+10% YoY)
- Highly engaged acres: +25% YoY
- 99% of combines ordered with harvest automation; 80% taking ultimate package
5. New Product Launches
Deere announced new 210, 230 & 260 P-Tier excavators—the first fully Deere-designed and North Carolina-built excavators—launching at CONEXPO 2026. These target the 20-ton class, representing ~40% of the North American construction equipment industry.
Ask Fintool AI AgentQ&A Highlights
On Large Ag Recovery Timing
Q: Given improving order books, why not raise large ag guidance?
Josh Beal (Director of IR): "We're probably closer to down 15 or so on tractors... Combines will finish better than the range, more like probably down 10-15%. What are we seeing? From an ag fundamental standpoint, still challenged... However, we do feel like things are more stable."
On Tariff Relief
Q: If tariffs are rolled back, will relief be passed to farmers?
Josh Beal: "We won't react too quickly. Similar to when we saw tariffs going up last year, we didn't take immediate price action." Josh Jepsen (CFO): "We haven't taken outsized price as it's related to tariffs... we're focused on how do we mitigate."
On Construction Strength
Q: What's driving the construction order surge?
Josh Beal: "Contractor confidence... they feel good about their backlog growing even as they look into 2027. Infrastructure, mega projects, certainly supporting data centers... is where we're seeing more of that strength." Ryan Campbell (President, C&F): "The world is facing growing urgency to upgrade or replace key infrastructure... there's a huge demand to support the required infrastructure for AI investments."
On Price/Cost Balance
Q: How is price vs. cost playing out?
Josh Beal: "We're probably closer now to price cost neutral for the full year... That price cost neutral is inclusive of the $600 million of incremental tariffs that we're seeing this year." Josh Jepsen: "First quarter, ex tariffs, we were production cost favorable."
Key Management Quotes
On Cycle Positioning:
"These positive developments reinforce our belief that 2026 represents the bottom of the current cycle and provides us with a strong foundation for accelerated growth going forward." — John May, CEO
On Investment Through the Cycle:
"Our financial strength has allowed us to maintain high levels of investment throughout the cycle, which positions us well for future growth, particularly as the cycle inflects." — Josh Beal
On Government Support:
"The government payments should continue to mitigate downside risks for farmers' balance sheets, acting as a bridge in an environment where crop cash receipts are under pressure." — Josh Jepsen, CFO
Forward Catalysts
Risks & Concerns
- Tariff Uncertainty: $1.2B annual tariff cost persists; IEEPA tariffs account for ~half of exposure
- South America Softness: Brazilian market weakening due to high interest rates and BRL appreciation
- Large Ag Still Challenged: Production & Precision Ag margins compressed to 4.4% in Q1
- Housing Subdued: Residential construction still weak, affecting smaller contractor demand
- Competitive Pricing Pressure: C&F pricing slightly negative in Q1; price guidance trimmed 0.5 points
Ask Fintool AI AgentBottom Line
Deere delivered a solid beat-and-raise quarter, with Construction & Forestry emerging as the standout segment. While large ag remains challenged, improving order books and used inventory dynamics suggest the worst may be over. Management's conviction that "2026 is the bottom" combined with the guidance raise and 50%+ order book growth in construction gave investors confidence, driving the stock to 52-week highs.
Key metrics to watch going forward:
- Construction order book sustainability — Can the 50% surge continue?
- Large ag order velocity — Will replacement demand materialize?
- Used inventory progression — Critical for large ag recovery
- Tariff policy developments — $1.2B exposure remains a headwind
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