Deere & Company (DE) — Q3 2026 Earnings Preview
Key Preview Table: What to Watch for in Q3 2026
| Factor | Q3 2026E (Consensus) | Q3 2025 Actual | YoY Change | Q2 2026 Actual | Sequential Trend | Guidance/Context Notes |
|---|---|---|---|---|---|---|
| Revenue ($M) | $10,766 | $10,327 | +4% | $11,495 | -6% | Guidance: FY26 $4.5B–$5.0B net income; Q3 typically seasonally lower than Q2 |
| Gross Profit Margin (%) | 26.8 | 27.9 | -110 bps | 28.6 | -180 bps | Margins pressured by tariffs, input costs; Q2 margin benefited from one-time tariff refund |
| EBITDA ($M) | $1,938 | $1,849 | +5% | $2,320 | -16% | EBITDA margin expected to compress YoY and sequentially |
| Net Income ($M) | $1,257 | $1,223 | +3% | $1,553 | -19% | Guidance: FY26 $4.5B–$5.0B; Q3 typically below Q2, above Q1 |
| EPS (GAAP) | $4.73 | $4.59 | +3% | $5.74 | -18% | EPS tracks net income; Q2 benefited from tariff refund |
| Cash Flow per Share ($) | $14.23 | $6.53 | +118% | $10.04 | +42% | Strong cash flow YTD; Q3 typically strong on working capital release |
| Equipment Ops Margin (%) | 16.9 | Q2 margin boosted by tariff refund; Q3 expected to normalize | ||||
| Segment Revenue Growth | See segment table below |
Segment Revenue & Margin Preview — Q3 2026E
| Segment | Q3 2026E Revenue ($M) | Q3 2025 Actual ($M) | YoY Growth | Q2 2026 Actual ($M) | Q3 2026E Margin (%) | Q3 2025 Margin (%) | Guidance/Notes |
|---|---|---|---|---|---|---|---|
| Production & Precision Ag | $4,273 | $4,503 | 11–13 (FY guide) | 13.6 | Down 5–10% FY26; Q3 likely down YoY | ||
| Small Ag & Turf | $3,025 | $3,485 | 13.5–15 (FY guide) | 16.0 | Up ~15% FY26; Q3 likely up YoY | ||
| Construction & Forestry | $3,059 | $3,790 | 10–12 (FY guide) | 7.7 | Up ~20% FY26; Q3 likely up YoY |
Note: Segment-level Q3 2026 consensus not available; use Q2 2026 actuals and FY guidance as directional indicators.
Summary and Conclusions
- Q3 2026 is expected to show modest YoY growth in revenue and net income, with consensus forecasting revenue of $10.8B (+4% YoY) and net income of $1.26B (+3% YoY).
- Margins are under pressure YoY and sequentially due to ongoing tariff headwinds, higher input costs, and a less favorable mix, especially in large ag.
- Q2 2026 benefited from a one-time $272M tariff refund, which will not repeat in Q3; expect margins to normalize lower.
- Small Ag & Turf and Construction & Forestry segments are expected to drive growth, offsetting continued weakness in Production & Precision Ag (large ag), which remains below trough levels.
- Management has maintained FY26 net income guidance at $4.5B–$5.0B, signaling confidence in the full-year outlook despite volatility in ag markets and global macro uncertainty.
- Key focus areas for Q3: pace of recovery in large ag, sustainability of margin improvement in Small Ag & Turf and C&F, price realization vs. cost inflation, and any updates on order books/inventory trends.
Recent Results and Year-over-Year Comparison
Q3 2025 Actuals (Restated Where Available)
| Metric | Q3 2025 Actual |
|---|---|
| Revenue ($M) | $10,327 |
| Gross Profit Margin | 27.9% |
| EBITDA ($M) | $1,849 |
| Net Income ($M) | $1,223 |
| EPS (GAAP) | $4.59 |
| Cash Flow/Share ($) | $6.53 |
- Q3 2025 was a down quarter YoY, with revenue -9% and net income -26% vs. Q3 2024.
- Production & Precision Ag sales were down 16% YoY, Small Ag & Turf down 1%, and Construction & Forestry down 5%.
- Margins were pressured by tariffs and negative price realization, especially in large ag and C&F.
- Company was coming off a tough comparable in large ag, with industry sales down ~30% in North America.
Forward Guidance and Consensus
FY26 Guidance (as of Q2 2026)
| Metric | FY26 Guidance | Notes |
|---|---|---|
| Net Income ($B) | $4.5–$5.0 | Unchanged since Q1; midpoint $4.75B |
| Equipment Ops Cash Flow ($B) | $4.5–$5.5 | Raised by $500M at both ends in Q1 |
| Effective Tax Rate (%) | 24–26 | Lowered by 1pt vs. prior due to mix/discrete items |
| PPA Net Sales Growth | Down 5–10% | Price +1%, FX +3% (Q2 update) |
| SAT Net Sales Growth | Up ~15% | Price +1.5%, FX +1% (Q2 update) |
| C&F Net Sales Growth | Up ~20% | Price +2.5%, FX +2% (Q2 update) |
| PPA Margin (%) | 11–13 | Unchanged |
| SAT Margin (%) | 13.5–15 | Unchanged |
| C&F Margin (%) | 10–12 | Raised in Q2 |
| Tariff Expense ($B) | ~$1.2 | $900M net after Q2 refund; 3% margin headwind |
| Financial Services NI ($M) | ~$860 | Raised in Q2 |
Management Commentary and Intra-Quarter Color
On Market Conditions and Segment Trends:
- Large Ag: "Customer sentiment remains muted... margins face headwinds from elevated and volatile input costs and high interest rates." (Q2 2026 call)
- Small Ag & Turf: "Benefiting from a recovery in turf end markets and healthy cash flow in the dairy and livestock sector."
- Construction & Forestry: "Robust infrastructure spending and rental fleet replacement are driving increased demand... order book continues to strengthen up more than 60% since November."
On Margins and Tariffs:
- "Q2 margin benefited from a one-time $272M IEEPA tariff refund, lifting margins by nearly 2.5 points. Net of refunds, full-year direct tariff exposure remains at ~$1.2B."
- "Implied net price realization for equipment operations is between 1.5% and 2% for the year, consistent with general inflation levels, excluding the impact of tariffs."
- "We are not surcharging our customers on tariffs... focusing on reducing our tariff exposure through cost actions."
On Inventory and Order Books:
- "Inventories for both high horsepower tractors and combines are down more than 50% from their mid-2024 peak."
- "Order books remain healthy and consistent with our retail-driven production plans."
- "Within Small Ag & Turf in North America, favorable inventory levels are being maintained, following last year's under production."
On Innovation and Product Launches:
- "Launched multiple new products and solutions to strengthen our leadership across each major step of the ag production cycle."
- "See & Spray technology continues to advance... globally, it was 5 million acres last year; early in the spring season, customers are spraying more acres than last year."
- "Precision Essentials renewal rate is over 90% for the second-year cohort."
What to Watch for in Q3 2026
- Revenue and Margin Progression: Can Deere maintain positive YoY growth in revenue and net income despite ongoing large ag weakness and margin headwinds?
- Tariff Impact: How does the absence of the Q2 one-time tariff refund affect Q3 margins? Is the company making further progress on tariff mitigation?
- Segment Performance: Will Small Ag & Turf and Construction & Forestry continue to offset large ag softness? Are segment margins holding up?
- Order Book and Inventory Trends: Any signs of inflection in large ag demand/order books? Is inventory discipline sustained?
- Price Realization vs. Cost Inflation: Is price/cost neutral or positive in Q3? Are there further pressures from input/freight/materials costs?
- Technology Adoption: Updates on See & Spray, Precision Essentials, and other tech adoption/utilization rates.
- FY26 Guidance: Any change to the $4.5B–$5.0B net income range or segment outlooks?
Conclusion
Deere enters Q3 2026 with a stable but cautious outlook. The company is coming off a tough comparable in large ag but is seeing strength in Small Ag & Turf and Construction & Forestry. Margins are under pressure from tariffs and input costs, and the Q2 one-time tariff refund will not repeat. The most important factors for Q3 are the sustainability of margin improvement, the pace of recovery in large ag, and the ability to offset cost headwinds with price and operational execution. Guidance remains unchanged, and management continues to emphasize inventory discipline, innovation, and long-term growth targets.
