Deere & Co. (NYSE: DE) was a bright spot in another volatile week for stocks. DE stock soared by more than 10% after the company, known for its iconic agricultural and industrial equipment, reported a strong double-beat in its Q1 2026 earnings report on Feb. 19.
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The company reported earnings per share (EPS) of $2.42, which was 17.4% higher than expectations of $2.06. Revenue of $8 billion came in 6.6% above the $7.5 billion forecast. The company also modestly raised its fiscal year 2026 forecast.
But with the stock now trading at over $660 per share, is there still upside for investors looking to profit from sector rotation? In order to answer that question, let’s dive into the details of the report.
A Closer Look at the Numbers
The headline beat was impressive, but when you dig into the details of the report, a more nuanced story emerges. Total net sales and revenues came in at $9.6 billion, up 13% from $8.5 billion in the year-ago quarter. Equipment operations net sales of $8.0 billion were up 18% year-over-year (YoY).
However, net income attributable to Deere fell 25% to $656 million compared to $869 million in Q1 2025, and diluted EPS declined 24% from $3.19 to $2.42. This means the quarter’s EPS beat was against a lowered bar, not a growth story on an absolute basis.
The strength was unevenly distributed across segments. Construction & Forestry was the standout, with net sales surging 34% to $2.67 billion, driven largely by favorable volume and mix. Small Ag & Turf posted a solid 24% sales increase to $2.17 billion.
But that wasn’t the case in every category. For example, Production & Precision Ag — Deere’s largest and most closely watched segment — grew a more modest 3% to $3.16 billion, with operating profit compressed by headwinds in production costs, currency, and warranty expenses.
Looking ahead, Deere’s full-year 2026 guidance calls for net income of $4.5 to $5.0 billion and net operating cash flow of $4.5 to $5.5 billion. The company projects Construction & Forestry net sales growing roughly 15% for the full year with operating margins expanding to 9–11%, while Small Ag & Turf is also forecast to grow about 15% with margins improving to 13.5–15%. The Production & Precision Ag segment faces a tougher road, with full-year net sales expected to decline 5–10% off the FY2025 base of $17.3 billion. This forecast reflects the well-documented downturn in large ag equipment demand in North America, where Deere forecasts the industry to be down 15–20% for the year.
In other words, investors should cheer the beat because it was real. However, they should note that it was built on construction momentum and a resilient small ag consumer, not a recovery in the large farm equipment cycle that has been in place for the past two years.
Will DE Stock Confirm the Bull Flag Pattern?
The DE stock chart displays a bull flag pattern. This is a bullish momentum indicator that commonly signals that a strong move higher is coming. So even with the post-earnings move of over 10%, there’s still time to catch upside in DE stock.
That sentiment is backed up by analysts’ forecasts, which have been moving higher since the earnings report. The stock is about 3% above its consensus price target of $640.09. However, investors should pay attention to analysts who have weighed in since the report.
- Truist Financial raised its price target to $793 from $612.
- Robert Baird raised its price target to $675 from $467.
- UBS Group raised its price target to $775 from $535.
- Oppenheimer reiterated its price target of $715.
And those price targets could be further influenced by a positive answer to two questions.
Will Deere Receive Any Relief from the Recent Tariff Decision?
On Feb. 20, the U.S. Supreme Court struck down the IEFA tariffs put in place by the Trump administration. However, as of this writing, it’s unclear how much benefit, if any, Deere will get. That’s because the company is specifically impacted by the Section 232 tariffs on metals such as steel and aluminum, which are critical to Deere’s manufacturing process.
It’s fair to note that the company gets more cost certainty since the court ruled that the Trump administration cannot unilaterally raise these tariffs above 15%. However, it’s possible that Deere’s overall tariff costs will be lower over time. That won’t be clear for at least another quarter, and likely several quarters. Therefore, investors should be careful not to let the Supreme Court ruling impact their investment strategy.
Could Deere Split Its Stock?
This is just speculation on my part, but it’s possible. John Deere has split its stock three times in its history, with the last taking place in 2007. Second, the stock is trading above $660 per share. Many companies don’t announce a split until their stock price is much higher.
On the other hand, there have been recent examples, such as Apple Inc. (NASDAQ: AAPL) and Walmart Inc. (NASDAQ: WMT), that announced splits at prices much lower than DE stock. Plus, the stock is trading near the top of its 52-week range, which may decrease retail investor interest, which is a critical factor that companies consider when splitting its stock.
DE Stock Is Part of the Best-in-Class for a Volatile Market
DE stock is up more than 42% in 2026. That’s on pace to beat the total return of over 35% for the stock in 2025. It’s also higher than the stock’s 3- and 5-year average. Deere & Co. balances its current strength in the industrial sector with the opportunity for future growth from its autonomous products and services.
That ability to dip into two sectors adds to the appeal of Deere stock. It also helps to justify a forward price-to-earnings (P/E) ratio of around 32x. That’s slightly higher than the sector average and significantly above that of the S&P 500.
Deere & Co. also pays a dividend that has an annual payout of $6.48 per share, which provides an extra sweetener for buying and holding DE stock in a diversified portfolio.
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