Deere & Company · DE · FY2026 Q2 · Calendar Q2 2026
Deere Q2 EPS Beats by 15% as Construction Surges; Large Ag Still Soft
Deere's Q2 results reveal a two-speed company. Construction & Forestry and Small Ag & Turf are thriving on infrastructure spending, data-center demand, and replacement cycles, while large agriculture remains pressured by input costs and geopolitical headwinds. A one-time $272M IEEPA tariff refund lifted equipment margin to 16.9% but is not repeatable, meaning underlying margin quality is narrower than the headline suggests. Management maintained the overall FY26 net income outlook and raised C&F sales guidance by roughly 20%, a more conservative posture than Q1 when guidance was raised across two segments. The stock sold off 5.2% on the report despite the EPS beat, likely reflecting the step-down from raise to maintain and the non-recurring nature of the tariff refund. A subsequent 12.7% drift higher suggests the market re-evaluated the construction and precision-ag growth story. With…
Company context
Snapshot as of publicationDeere & Company is a global manufacturer and distributor of a wide range of equipment. The company's operations are organized into four primary business segments: Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services. The Production and Precision Agriculture segment focuses on large-scale farming and advanced agricultural practices, offering medium-sized tractors, various harvesting machinery (including combines, cotton pickers, and sugarcane harvesters), front-end harvesting tools, sugarcane loaders, pull-behind scrapers, and essential tillage and seeding implements. It also supplies specialized application equipment like sprayers and nutrient management systems, along with soil preparation machinery, primarily serving grain growers. The Small Agriculture and Turf segment caters to smaller farming needs and land maintenance. Its product line includes utility tractors along with their complementary loaders and attachments.…
Earnings scorecard
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What changed
Q2 net sales rose 5% YoY to $13.37B with equipment margin at 16.9%, aided by a one-time $272M IEEPA tariff refund worth approximately 2.5 margin points. EPS of $6.55 beat the $5.70 consensus by 15%, and revenue of $11.78B topped the $11.55B estimate by 2%. Construction & Forestry grew 29% YoY, prompting a roughly 20% raise in full-year C&F sales guidance. Small Ag & Turf grew 16% with margins above 20%. Large Ag remained under pressure from input costs and geopolitical tensions but showed inventory improvement. Management reaffirmed the $20B US manufacturing investment plan and announced a new excavator plant in Kernersville, North Carolina, with a $70M expansion. A Starlink partnership was disclosed to provide satellite connectivity for JDLink devices. The stock fell 5.2% on the report session against a flat benchmark before drifting 12.7% higher over subsequent weeks on 3.2x baseline volume.
Guidance delta
Management maintained the overall FY26 net income outlook while raising Construction & Forestry full-year net sales guidance by approximately 20%. Net price realization is targeted at 1.5-2% for FY26. Capex outlook increased, with the $20B US manufacturing investment program continuing over the next decade. Tariff exposure remains approximately $1B. This represents a step-down from Q1, where guidance was raised across both Small Ag & Turf and C&F, and the net income forecast was set at $4.5-5.0B. The maintained overall outlook suggests management sees large ag weakness offsetting construction strength at the total-company level.
Key takeaways
- Q2 net sales up 5% YoY to $13.37B; EPS of $6.55 beat consensus by 15% and revenue beat by 2%.
- Construction & Forestry surged 29% YoY; FY26 C&F sales guidance raised roughly 20%.
- Small Ag & Turf grew 16% YoY with margins above 20%; large Ag under pressure but inventory improving.
- One-time $272M IEEPA tariff refund boosted equipment margin to 16.9%, contributing ~2.5 margin points.
- Starlink satellite connectivity partnership and new NC excavator plant highlight technology and capacity investments.
Management priorities
- Launch additional excavator models and expand US manufacturing capacity, including the new Kernersville, NC plant
- Release new precision-ag products including 8R series tractors, ExactDepth planting, and See & Spray enhancements
- Scale Starlink satellite connectivity across the global equipment fleet via JDLink
- Continue the $20B US manufacturing capex program over the next decade
- Accelerate digital services growth through JDLink and SaaS offerings
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Methodology
Reported and consensus figures come from FN2's earnings event records. Market reaction and volume are calculated from daily adjusted bars around the event; abnormal move subtracts the SPY move over the same window.
Transcript intelligence is a structured synthesis of the current and prior earnings-call analyses. Missing values stay missing and are never estimated.
By FN2 Research · Updated . For educational purposes only; not investment advice.