Deere (DE) Earnings Aug 20: The Best Case Is Still a Down Year

TL;DR

• Deere reports fiscal Q3 before the open on Thursday, August 20, with the call at 10:00am ET, the same morning as Walmart. Consensus is $4.85 of EPS, up 2.1% from $4.75, on equipment operations net sales near $10.8 billion.
• The full-year guide is $4.5-5.0 billion of net income. Deere earned $5.027 billion in fiscal 2025. So the top of the range is a shade below last year, and the midpoint is a 6% decline, in a year management keeps calling the bottom.
• $272 million of the first half came from the Supreme Court. The February 20 ruling invalidating IEEPA tariffs let Deere book a refund recovery in fiscal Q2. That money came from a courtroom, not from selling tractors.
• One segment is doing all the damage. Production & Precision Ag sales fell 14% last quarter and its operating profit fell 39%. Small Ag & Turf rose 16% and Construction & Forestry rose 29%.
• My arithmetic on the guide: the first half brought $2.429bn, consensus implies roughly $1.31bn in Q3, so Q4 has to deliver $0.76bn to $1.26bn. Last year's Q4 was $1.065bn.

The Board

Two segments growing double digits, one shrinking, and a full-year guide that tops out below last year.

What Deere Is Expected to Report

Consensus wants $4.85 per share against $4.75 in the year-ago quarter, on equipment operations net sales of roughly $10.8 billion versus $10.357 billion. Note which revenue line that is: Deere's total "net sales and revenues" was $12.018 billion in fiscal Q3 2025, and the difference is the finance arm. Compare the wrong two numbers and the quarter looks like a 10% collapse instead of a 4% gain.

The setup is unusual. Revenue up mid single digits, earnings up two percent, inside a full-year forecast that implies the year gets worse from here.

The Guide Tops Out Below Last Year

Deere earned $5.027 billion in fiscal 2025. The fiscal 2026 forecast, raised to $4.5-5.0 billion at the Q1 report in February and held there in May, does not reach it at the top end.

That framing matters because of what management has been saying alongside it. CEO John May called 2026 "the bottom of the current cycle" in February, and the CFO repeated the claim in May. Both can be true: a cycle can bottom in a year that still earns less than the one before it. But a reader who hears "the bottom" and expects a rising number will misread Thursday.

Here is the part the guide does not advertise. First-half net income was $2.429 billion. If Q3 lands on consensus, that is about $1.31 billion more, taking the year to roughly $3.74 billion with one quarter to go. Hitting $4.5 billion then needs about $760 million in Q4. Hitting $5.0 billion needs $1.26 billion, which would be 18% above last year's fourth quarter of $1.065 billion, in a year running down mid single digits. The bottom of that range looks safe and the top looks decorative.

The $272 Million That Came From a Court

On February 20 the Supreme Court invalidated tariffs imposed under the International Emergency Economic Powers Act. Deere recorded a $272 million recovery for refund claims filed with and accepted by US Customs and Border Protection, and booked it in the second quarter. The release puts the tariff impact inside each segment's production costs, so the money is spread through the margin lines rather than sitting on its own row. Several write-ups put the lift at about two and a half points of equipment margin; Deere's own release does not give that figure, so I am leaving it as the $272 million the company did state.

I would not treat that as an operating result. Last year Deere was absorbing roughly $200 million of tariff cost in the third quarter alone. The question for Thursday is whether more refund money lands in Q3, and if it does, what the margin looks like without it. Deere has also said it will not put surcharges on customers, which means tariff swings hit the income statement rather than the dealer.

The Farm Half and the Other Half

Production & Precision Agriculture is the big, profitable core, and it is the one contracting. Last quarter its sales fell 14% to $4.503 billion and operating profit fell 39% to $706 million, with margin down from 22.0% to 15.7%. Deere guides the segment down 5-10% for the full year, and the industry outlook has US and Canada large ag down 15-20%.

Everything else is working. Small Ag & Turf sales rose 16% with margin up to 20.6%, and Construction & Forestry rose 29% with profit up 48%. Deere guides those two up ~15% and ~20% respectively. South America is the soft spot, cut to down about 15% on high rates, a stronger real and fertiliser costs.

Deere is the industrial cross-check in a week otherwise given over to retailers, which is why the week-ahead hub files Thursday as the densest session of the five. So the trade going in is really a question about mix. Two thirds of the equipment business is growing and covering for a shrinking third that carries the better margins. Thursday says whether the cover is still holding, and whether the large ag decline is decelerating or merely continuing.

What Would Change My Mind

A raise to the top half of the range on genuine Production & Precision Ag stabilisation, rather than another refund, would make the "bottom" language credible and I would take it seriously. The opposite tell is a maintained guide alongside another one-off recovery: that combination would mean the operating business slipped and something non-operating filled the hole. Order books for early-order programmes matter more than the headline here, because they price next spring rather than this one. Every date for the week sits in the earnings calendar, and the retail earnings hub has the consumer side of the same Thursday.

I am not logging an options play. I could not source a live chain or a settled Thursday spot for Deere at the time of writing, and a structure with no entry price cannot be scored later.

The One-Line Read

Deere's best case for 2026 earns less than 2025 did, a chunk of the first half arrived from a courtroom rather than a dealership, and the segment paying the bills is the one shrinking fastest.