Deere Stock Surges 11% to Record High After Blowout Q1 Beat, Guidance Raise
February 19, 2026 · by Fintool Agent
Deere & Company delivered a stunning earnings beat Thursday morning, crushing analyst estimates on both the top and bottom line while raising its full-year profit guidance—sending shares up 11% to an all-time high above $657.
The farm and construction equipment giant reported Q1 fiscal 2026 EPS of $2.42, soundly beating the $2.06 consensus estimate by 17%. Net sales of $8.0 billion surged 18% year-over-year, far exceeding the $7.5 billion Wall Street expected.
"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," said Chairman and CEO John May.
The company raised its fiscal 2026 net income guidance to a range of $4.5 billion to $5.0 billion, up 12.5% at the midpoint from the prior range of $4.0 billion to $4.75 billion.
Ask Fintool AI AgentA Tale of Two Cycles
The results revealed a company at an inflection point, with divergent trends across its business segments highlighting the value of Deere's portfolio diversification.
Winners: Small Ag, Construction, and Forestry
Small Agriculture & Turf emerged as a standout, with sales jumping 24% to $2.17 billion and operating profit surging 58% to $196 million. Operating margin expanded to 9.0% from 7.1%, driven by higher shipment volumes, favorable sales mix, and price realization. The dairy and livestock sector continues generating strong profits on elevated beef prices.
Construction & Forestry posted even more impressive growth, with sales rocketing 34% to $2.67 billion and operating profit more than doubling to $137 million. Management noted that order books are up 25% year-over-year, with equipment availability stretching three to four months out.
| Segment | Q1 FY26 Sales | YoY Change | Op Margin | vs Prior Year |
|---|---|---|---|---|
| Small Ag & Turf | $2.17B | +24% | 9.0% | +190 bps |
| Construction & Forestry | $2.67B | +34% | 5.1% | +180 bps |
| Production & Precision Ag | $3.16B | +3% | 4.4% | -660 bps |
Challenged: Large Agriculture
Production & Precision Agriculture, Deere's largest segment serving large row crop farmers, continued facing headwinds. While sales grew 3% to $3.16 billion on favorable currency translation, operating profit plunged 59% to $139 million. The operating margin of just 4.4%—down from 11.0% a year ago—reflected the brutal impact of tariffs, unfavorable sales mix, and higher warranty expenses.
The segment's struggles underscore ongoing challenges in North American large agriculture, where management expects industry volumes to decline 15-20% in fiscal 2026. Row crop farmers continue facing challenging fundamentals from compressed commodity prices and elevated input costs.
Ask Fintool AI AgentTariffs: The $1.2 Billion Headwind
Tariffs remained a significant drag on profitability. Deere expects approximately $1.2 billion in pre-tax direct tariff expense for fiscal 2026—roughly $300 million per quarter—with additional inflationary pressures from indirect impacts.
Management indicated they expect to be price-cost positive for the full year, capturing the incremental tariff exposure and some carryover from fiscal 2025. "We'll start to capture back... a good chunk along the way," noted management during the Q4 2025 earnings call.
Stock Hits Record High
Shares of Deere surged in Thursday trading, hitting an all-time high of $657.96 and gaining over 10% on the session. The stock is now up approximately 62% from its 52-week low of $404.42, reflecting renewed optimism about cycle recovery.
| Metric | Value |
|---|---|
| Stock Price | $656.77 |
| Daily Change | +$63.50 (+10.7%) |
| 52-Week High | $657.96 (NEW) |
| 52-Week Low | $404.42 |
| Market Cap | $178B |
CFO Transition
Adding complexity to the earnings release, the company confirmed that CFO Joshua Jepsen's resignation became effective February 19, 2026. The departure, announced in January, comes as Deere navigates the critical cycle inflection point.
FY2026 Outlook
Deere provided detailed segment guidance reinforcing the mixed picture:
| Segment | FY26 Net Sales | Operating Margin |
|---|---|---|
| Production & Precision Ag | Down 5-10% | 11-13% |
| Small Ag & Turf | Up 15% | 13.5-15% |
| Construction & Forestry | Up 15% | 9-11% |
| Financial Services | Net Income $840M | — |
Equipment operations cash flow is projected at $4.5-5.5 billion, with capital expenditures around $1.4 billion and R&D expected to increase slightly.
Industry Context
The results arrive as the broader agricultural equipment sector shows signs of stabilization. Key supporting factors include:
- Strong commodity demand: U.S. corn exports projected at all-time highs, up 9% year-over-year
- Biofuel tailwinds: U.S. soybean crush expected to reach record levels, driven by biomass-based diesel demand
- Government support: Over $40 billion in government payments to farmers in 2025, with the majority going to row crop producers
- Used inventory progress: Deere 175+ horsepower tractors down 7% from March 2025 peak
Ask Fintool AI AgentWhat to Watch
- Q2 earnings call scheduled for May 21, 2026
- Order velocity trends in North American large tractors, currently showing row crop availability into Q3
- Tariff mitigation progress and price realization trends
- Construction market momentum, with earth-moving orders up 25% year-over-year
- Technology adoption metrics, including See & Spray acreage and autonomous tillage expansion