Key Takeaways:
- Technology Momentum: See & Spray covered 5M acres in 2025 with 50% herbicide savings, while autonomous tillage surpassed 200K acres
- Price Projection: Based on current fundamentals, the stock could reach $655 by October 2028
- Potential Gains: This target implies a total return of 27% from the current price of $514
- Annual Return: Investors could see roughly 9% annual growth over the next 2.8 years
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Deere & Company (DE) delivered $5 billion in net income during fiscal 2025 despite facing one of agriculture’s most challenging downturns in years.
While the North American large agricultural industry declined roughly 30%, the company achieved 12.6% equipment operations margins—450 basis points better than the last comparable in 2016.
With fiscal 2026 expectations pointing toward Large Agricultural bottoming while Small Agricultural & Turf and Construction & Forestry position for growth, Deere’s transformation into a technology-driven platform is reshaping how investors should value the business.
- The company closed fiscal 2025 with over $5 billion in cash flow from equipment operations and returned $2.8 billion to shareholders through dividends and buybacks.
- Despite $1.2 billion in projected tariff headwinds for 2026, Deere & Company stock trades at $514, offering upside for investors who grasp the company’s structural improvements and technology inflection point.
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What the Model Says for Deere Stock
We analyzed Deere through the lens of its evolution from a cyclical equipment manufacturer into a precision agriculture and autonomous technology leader.
- Deere demonstrated remarkable resilience during the downturn with new field inventory for 220+ horsepower tractors ending fiscal 2025 at the lowest unit level in over 17 years.
- Used inventory reduction is gaining momentum, with model year ’22 and ’23 Deere 8R tractors down 25% from March 2025 peaks.
With technology adoption accelerating across all production systems—from 24,000 Precision Essentials retrofit kits ordered to 8,000 JDLink Boost satellite connectivity units—Deere has a significant runway ahead.
Using a forecast of 7.4% annual revenue growth and 15.8% operating margins, our model projects the stock will rise to $655 within 2.8 years. This assumes a 25x price-to-earnings multiple.
That represents a slight contraction from Deere’s current P/E of 30.9x. As the company navigates near-term weakness in Large Agriculture while investing heavily in autonomous vehicles, See & Spray technology, and digital platforms, some multiple compression is reasonable given cyclical headwinds.
The real value lies in structural margin improvements that enable double-digit profitability even at trough production levels, and in technology solutions that create sticky, recurring revenue streams.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for DE stock:
1. Revenue Growth: 7.4%
Deere’s growth will be driven by a mix of recovery and technology adoption.
Large Agriculture Stabilization: North American large agriculture is expected down 15-20% in 2026, representing what management believes is the cycle bottom. Strong government support exceeding $40 billion, robust biofuel demand, and improving commodity prices from the U.S.-China trade agreement provide upside.
Small Agriculture & Turf Recovery: Forecast up 10% in 2026, driven by healthy dairy/livestock margins and housing market improvement. Underproduction in 2025 created lean inventory levels, positioning the company for growth.
Construction & Forestry Growth: Expected to grow by up 10%, with earthmoving order books up 25% year-over-year. Infrastructure spending and rental fleet investments support momentum.
Technology Expansion: See & Spray adoption is growing with 90%+ take rates on new combines, returning customers increasing usage 20% year-over-year, and autonomous tillage kits entering commercial production for spring 2026 delivery.
2. Operating margins: 15.8%
Deere operates with structurally higher margins despite cyclical pressures.
Current Performance: Fiscal 2025 delivered 12.6% margins, including 1.5 points of tariff impact—dramatically better than prior cycle troughs.
Tariff Management: The $1.2 billion tariff headwind in 2026 will be offset by pricing actions (1.5% realization expected) and continued material cost reductions, resulting in price/cost positive for the full year.
Technology Mix Benefit: Higher-margin precision agriculture solutions, digital subscriptions, and autonomous offerings will increasingly contribute to the mix as adoption scales.
3. Exit P/E Multiple: 25x
The market currently values Deere at 30.9x earnings. We assume multiple contracts at 25x throughout our forecast period.
Reflects Cyclical Reality: Deere’s P/E has averaged 25.6x over the past year and 18.6x over 3 years. The current elevated multiple reflects temporary earnings compression—normalizing to 25x accounts for recovery while maintaining a premium to industrials.
Quality Premium Justified: Deere deserves above-market multiples due to structural improvements delivering mid-cycle margins, technology leadership with 500M+ engaged acres in Operations Center, global diversification across multiple production systems, and $9 billion in trailing free cash flow generation.
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What Happens If Things Go Better or Worse?
Agricultural equipment faces commodity price volatility and execution risk. Here’s how Deere stock might perform under different scenarios through October 2028:
- Low Case: If revenue growth slows to 7.2%, the stock still offers a 25% total return (4.8% annually).
- Mid Case: With 8% growth, we expect a total return of 54.9% (9.6% annually).
- High Case: If Large Agriculture recovers faster and technology adoption accelerates, driving 8.8% growth, returns could hit 86.6% total (14% annually).
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The range reflects different recovery trajectories for North American large agriculture and technology monetization success.
In the low case, tariffs persist longer, or commodity prices weaken further.
In the high case, the cycle inflects in late 2026, autonomous solutions scale faster than expected, and See & Spray expands globally ahead of plan.
How Much Upside Does Deere Stock Have From Here?
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All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
