Is Deere (DE) a Buy Before Earnings? Not at 33x a Falling Number

TL;DR

• No, not the shares. Deere closed $608.85 on August 14, roughly 33x the $18.27 the Street carries for fiscal 2026. That figure is 1.2% below the $18.50 earned in fiscal 2025.
• Consensus and the company are not describing the same year. $18.27 across the 271.7 million diluted shares implied by last year's results puts net income near $4.96 billion, the top end of Deere's own $4.5-5.0 billion guide.
• The volatility is the better side of this print. Options price about a 5% move, and Deere has exceeded its implied move in six of its last eight reports.
• One segment is doing all the damage. Production & Precision Ag sales fell 14% last quarter with operating profit down 39%, while Small Ag & Turf rose 16% and Construction & Forestry rose 29%.
• The level I would pay is about $510, 28x the same $18.27 and some 16% below Friday's close. That is this site's own number on a 12-month view; no sell-side panel stands behind it.

Is Deere a Buy Before the August 20 Print?

No. The business is probably past the worst of its cycle and the stock is priced as though that is already settled fact.

Deere reports fiscal Q3 before the open on Thursday, August 20, with the call at 10:00am ET. The full setup, the segment detail and the arithmetic on the guide are in the earnings preview; this is the buy-or-wait call that sits on top of it.

The Board

A recovery multiple on a number that has not started recovering.

The Multiple Points One Way and the Earnings Point the Other

Deere trades at about 33x what the Street thinks it will earn this fiscal year. For a cyclical industrial in the trough of its cycle, a high multiple on depressed earnings is defensible: that is what a trough looks like from the outside, and buying the bottom always means paying a silly-looking multiple on the worst year.

My problem is that the multiple has already done the work the recovery has not. Fiscal 2026 EPS is expected to come in below fiscal 2025. There is no fiscal 2027 number I can source that I trust enough to put in print, so I am underwriting a 33x entry against a year that declines and a recovery whose size I would be guessing at. So I pass. Shorting it into a cycle turn would be a worse idea again.

Where Consensus and the Guide Part Company

Deere earned $5.027 billion in fiscal 2025 on $18.50 of diluted EPS, which implies roughly 271.7 million shares. Run the Street's $18.27 through the same share count and you get about $4.96 billion of net income. Allow for buybacks shrinking the count and it lands somewhere near $4.85-4.96 billion.

Deere's own full-year guide is $4.5-5.0 billion, raised to that range in February and held in May. So consensus is modelling the upper end of a range the company has not narrowed.

The preview's arithmetic is what makes that uncomfortable. First-half net income was $2.429 billion. A Q3 on consensus adds about $1.31 billion, which takes the year to roughly $3.74 billion with one quarter left. Reaching $5.0 billion then requires about $1.26 billion in Q4, some 18% above last year's $1.065 billion, in a year running down mid single digits. The top of the guide is reachable on paper and I do not believe it.

The Bull Case I Do Take Seriously

Two of the three segments are growing at double-digit rates. Small Ag & Turf rose 16% and Construction & Forestry rose 29% last quarter. The damage is concentrated in Production & Precision Ag, the large-row-crop business, where sales fell 14% and operating profit fell 39%.

That concentration is genuinely good news for a patient buyer. A single broken segment inside a company whose other two are compounding is a far better setup than broad weakness, and large-row-crop equipment is a replacement cycle that does not stay deferred forever. Farmers running eight-year-old combines eventually buy combines.

I would rather own that recovery at 28x than at 33x. The difference is about 16% of the share price and roughly one quarter of patience.

The Options Angle

Here the answer flips, and it flips on one number. Options are pricing roughly a 5% move on Thursday, and Deere has printed larger than its implied move in six of its last eight reports. A stock that beats the priced move three quarters of the time is not a stock whose volatility I want to sell at 5%.

That cuts against this site's own reflex. The house instinct on a name like Deere, boring and industrial and well covered, is that implied looks generous and premium is worth selling. The July record is a standing argument against trusting that instinct without checking the realised history first, and here the realised history says the opposite.

So the shares are a pass and the straddle is the play, which is an unusual pair to publish together. The preview logged nothing on Thursday night because neither a chain nor a settled spot was available then. Both halves of that have since firmed up: Friday's close gives the spot, and the compiled implied move gives a percentage to quote the structure against. There is still no live chain, so the cost below is a percentage of spot rather than a traded price, and the breakevens follow from it.

Trade log

#	Stance	Structure	Strikes and expiry	Cost or credit	Spot at writing	Implied move	Conviction	Breakeven
1	Long vol	Long straddle	$610 straddle, Aug 21	~5.0% of spot, no live chain	$608.85 (Aug 14 close)	±5.0%	6/10	needs >5.0%: $639.29 up, $578.41 down
2	Pass	Long shares	Common stock, into the print	n/a	$608.85 (Aug 14 close)	±5.0%	7/10	scored on the Aug 20 close

Both rows are in the Track Record ledger and get scored on the August 20 close.

The Price I Would Pay

About $510. That is 28x the same $18.27, roughly 16% below the August 14 close, on a 12-month view. The basis is simple enough to state: I want the multiple to stop pricing the top of a guide the company itself has not committed to before I pay for a recovery I cannot yet size.

If Thursday delivers a Q4 outlook that makes $5.0 billion look ordinary rather than heroic, that number moves up and I will say so. The week ahead has the rest of Thursday, which is a busy one.

The One-Line Read

Deere is a decent business at the wrong price: 33x for a year that shrinks. I will pay 28x. Until then the only thing here worth owning is the move itself.