Deere & Company reported earnings early Thursday that slumped for a fourth consecutive quarter, but handily beat analyst estimates. John Deere stock, a bellwether of the farm economy, flashed a bullish signal as it broke out to highs.
For 2025, the tractor maker gave weaker-than-expected financial guidance. But analysts looked past the headline numbers and came away with a positive read.
John Deere Earnings
For the three months ended Oct. 27, John Deere posted earnings of $4.55 on revenue of $11.143 billion. The earnings result solidly beat the average analyst estimate of $3.87 and sales also came in ahead of views. But year over year, earnings sagged 45% and sales crumbled 28%. That was mainly due to lower machinery shipment volumes. Further, the pace of declines on the top and bottom lines worsened for the fourth quarter in a row, according to FactSet.
Yet amid ongoing and significant market challenges, the Q4 results showed "solid execution," John Deere CEO John May said in an earnings release.
For full-year 2025, the company on Thursday projected net income of $5 billion-$5.5 billion, "highlighting improved structural performance." That fell below the average analyst estimate of $5.8 billion, FactSet shows.
Deere Stock: Earnings Breakaway Gap
Shares gapped up 8% to 437.42 in Thursday's stock market action, pegging a 52-week high intraday. John Deere stock cleared a 420.47 buy point from an eight-week flat base, MarketSurge charts show. Shares are in buy range to 441.49.
The relative strength line bolted to a consolidation high as Deere shares broke out, a favorable signal. But the stock has looped through a series of consolidations below a December 2022 high. That has sent the relative price strength indicator to a nearly two-year decline as it underperformed the S&P 500 during that period. The RS line is the blue line in the chart provided.
Thursday's earnings breakout came in the biggest daily volume since the flat base began to form, another positive sign.
Caterpillar added 2.2% on Thursday, regaining the 50-day moving average.
Key Takeaways On Deere, Farm Outlook
Analysts noted some pricing strength, especially for higher tech gear, revealed in Deere's earnings report.
Deere's guidance for its Production And Precision Agriculture segment "reflects a 15% expected decline in sales and a positive price realization of 1%, much better than the industry outlook of negative 30%," Faisal Hersi of Edward Jones wrote on Thursday.
Hersi explained further: "We think this reflects Deere's proactive actions to underproduce in this challenging environment, positioning it better than peers. Despite near-term headwinds, we believe Deere's strong execution and pricing have led to structurally higher profitability in this cycle, which should help the company navigate a softening agricultural demand environment."
However, the outlook for the farm sector remains highly uncertain. The incoming Donald Trump administration plans to deport illegal immigrants. Undocumented migrants are a major component of the U.S. agricultural workforce.
Further complicating the outlook for agricultural demand, Trump's proposed tariff policies could unleash retaliatory duties on U.S. exports.
Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.
