Deere Braces For $1.2 Billion Tariff Impact In Fiscal 2026, Large Tractor Inventory Hits 17-Year Low - Deere (NYSE:DE)

Core Viewpoint - Deere & Company is facing significant challenges due to a projected $1.2 billion tariff impact in fiscal 2026, which overshadows its recent earnings performance [1][2]. Financial Performance - Despite exceeding earnings estimates, Deere anticipates a decline in net income for fiscal 2026, projecting it to fall between $4.0 billion and $4.75 billion, down from over $5 billion in fiscal 2025 [2]. - The company reported a 30% decline in the North American large agriculture industry this year, yet managed to deliver margins that are over 450 basis points better than in 2016, the last comparable cycle [6]. Inventory and Cost Management - Deere has significantly reduced its inventory levels, with the inventory for its largest tractors reaching a 17-year low, indicating aggressive cost management in response to falling demand [4]. - The company is committed to inventory management and cost control to navigate the ongoing margin pressures from tariffs and challenges in the large agriculture sector [5]. Market Outlook - Executives view fiscal 2026 as a transitional year, suggesting that it may mark the bottom of the large agriculture cycle, while also indicating growth in other segments [5]. - Deere expects its construction and forestry business, along with its small agriculture and turf segment, to grow approximately 10% in fiscal 2026 [5]. Stock Performance - Year-to-date, Deere shares have increased by 12.36%, but this is lower than the S&P 500's return of 16.09% during the same period, with a minimal annual gain of 0.83% [6]. - Following the earnings report, Deere's stock fell by 5.67% to $469.87 per share [6].