Deere’s third quarter results were met with a negative market reaction, as the company’s revenue growth fell short of Wall Street expectations despite higher year-over-year sales. Management attributed the underperformance to increased production costs, notably from tariffs, and margin pressures across core segments. CEO John May acknowledged, “We delivered over $5 billion in net income, but this was achieved amid significant challenges, including heightened uncertainty and a rapidly changing business environment.” The quarter also saw management emphasize ongoing cost control efforts and progress in reducing used equipment inventories, but acknowledged that these actions could not fully offset the impact of external headwinds.
Is now the time to buy DE? Find out in our full research report (it’s free for active Edge members).
Deere (DE) Q3 CY2025 Highlights:
- Revenue: $10.58 billion vs analyst estimates of $11.62 billion (14.1% year-on-year growth, 9% miss)
- Adjusted EPS: $3.93 vs analyst estimates of $3.81 (3.2% beat)
- Adjusted EBITDA: $1.91 billion vs analyst estimates of $1.66 billion (18.1% margin, 15.2% beat)
- Operating Margin: 12.8%, down from 15.6% in the same quarter last year
- Market Capitalization: $126.8 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Deere’s Q3 Earnings Call
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Stephen Volkmann (Jefferies) asked about the timeline and ability to offset the $1.2 billion tariff headwind. CFO Josh Jepsen replied that the company expects to partially recapture tariff exposure through price-cost actions, but “won’t get us fully there” this year, with mitigation efforts ongoing.
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Jamie Cook (Truist Securities) questioned the high decremental margins in production and precision agriculture. Jepsen explained that tariffs and negative geographic sales mix are elevating decrementals, and even with improvements in profitability outside North America, the magnitude of U.S. declines dominates margin performance.
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Kristen Owen (Oppenheimer) sought clarity on the drivers behind the muted price realization assumption for large agriculture. Jepsen pointed to a combination of geographic mix and a higher share of parts versus equipment sales, both of which result in lower average price increases across the segment.
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Tim Thein (Raymond James) asked about production cost trends excluding tariffs. Jepsen indicated production costs will be slightly unfavorable, driven by higher overheads and labor costs, but ongoing cost reduction initiatives are expected to provide some relief over time.
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Steven Fisher (UBS) asked about the confidence in South America’s flat outlook and whether improvements in U.S. housing will benefit small ag and turf. Jepsen noted easing inflation expectations in Brazil and strong order books, while expecting modest U.S. home sales gains to support turf equipment demand.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) the company’s ability to manage and offset tariff-driven margin pressure, (2) progress in reducing used equipment inventories and maintaining lean production in North America, and (3) adoption rates of new technologies in both agriculture and construction segments. Continued execution in technology rollouts and demand stabilization in key markets will also be important signposts for Deere’s performance trajectory.
Deere currently trades at $469.54, down from $498.13 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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