🎩 Stock Research Report: Deere & Company (DE) – Q1 2025

🧭 Executive Summary

Deere & Company – the timeless steward of the fields, forests, and construction sites – finds itself in a season of temporary hardship. In Q1 2025, the iconic green-and-yellow titan reported a 30% YoY revenue decline, challenged by tightening global credit conditions and an uncertain farming macro. Yet beneath the dust of contraction, Deere remains a fortress of innovation. With over $800M returned to shareholders and continued strides in automation and precision agriculture, this is a machine built for the long haul.

📉 Short-term pain.
🚜 Long-term harvest.

🧠 Investment Thesis

💼 Why Deere is Still a Compelling Investment

🌍 Global Brand Power: Unmatched trust in Ag, Construction & Forestry equipment
⚙️ Tech-Driven Transformation: Precision Ag, autonomy, and JDLink expanding rapidly
💵 Shareholder Friendly: Aggressive buybacks & steady dividend growth
🔁 Recurring Revenue Flywheel: Software, aftermarket services & subscriptions
🧱 Scale Advantage: Operating leverage and global dealer network
🌾 Farm Efficiency Trends: Increasing adoption of smart, high-yield ag equipment
🛡️ Resilient Margins: Even in downturns, mid-cycle targets held firm
🌱 Sustainable Innovation: ESG-aligned product and geographic expansion
📊 Attractive Valuation vs. Peers: Premium justified by quality and tech moat
🎯 Strategic Execution: Focused cost control and capex optimization

⏳ Short-Term Outlook (2025–2026)

🟢 Growth Catalysts

📡 Precision Ag Boom: 1,500+ kits & JDLink adoption soaring in Brazil 🇧🇷
📉 Inventory Normalization: High-horsepower tractors and combines trending leaner
💰 Brazilian Momentum: Government support and improving farm income
🛠️ Aftermarket Revenue: Expanding subscription base and parts sales
📈 Deep Market Trends: Global ag CAPEX recovering cyclically post-2024, supported by high replacement demand and yield-efficiency pressure
⚖️ Reciprocal Tariffs from China: Beijing’s threat of retaliatory tariffs on U.S. ag exports (soybeans, corn, wheat) could hit farm income hard, weakening CAPEX appetite across U.S. heartlands

🔴 Risks to Watch

🌀 Global Macro Swings: High interest rates, strong USD, tight credit
🌐 Geopolitical Uncertainty: China tariffs, EU regulatory threats
📉 Free Cash Flow Slump: Q1 FCF -154.97% QoQ; negative $3B
🧱 Weak NA Turf & Compact Tractor Demand
🚧 Construction Sector Softness: Slower activity in residential-heavy segments

⚖️ Verdict: ⚠️ Hold / Speculative Buy

Short-term clouds remain—but eyes should stay on the horizon.

🌅 Long-Term Outlook (2027–2030+)

🟢 Structural Growth Drivers

🤖 Autonomy & AI Integration: A new era of smart farming
🔄 Recurring Revenue Engine: From iron to insights—software & services
🌍 Emerging Market Expansion: Eastern Europe and Latin America embracing tech
📈 Capital Efficiency: Strong ROIC from smarter capex and dealer leverage
🧩 Moat Strengthening: Aftermarket, IP, and data lock-in
📊 In base-case growth resuming by 2026: DCF fair value climbs to $440/share; in adverse high-rate regime, floor holds near $375 due to cost discipline

🔴 Potential Long-Term Hurdles

💥 Competitive Pressures: Pricing wars in construction equipment
🧮 Financing Headwinds: Extended high-rate environment affecting demand
🧱 Capex Deferrals: Some farmers delaying upgrades until clarity returns

✅ Final Verdict: 🌟 Strong Buy (3–5 Year Horizon)

Innovation + loyalty + scale = a golden formula over time.

🧾 Key Financial Highlights

Metric	Q1 2025	Q4 2024	YoY Change
📉 Revenue	$8.51B	$11.9B	-30%
💰 Net Income	$869M	$1.21B	-30.2%
💸 Free Cash Flow	-$3.14B	$1.68B	-254%
🔁 Operating Cash Flow	-$2.29B	$1.2B	-291%
🏦 Total Debt	$80.5B	–	–

📊 Forward Financial Estimates

Year	Revenue (B)	EBITDA (B)	Net Income (B)	EPS
2025	$43.2	$10.8	$5.1	18.44
2026	$45.7	$11.5	$5.6	20.23
2027	$47.0	$11.7	$5.8	21.03
2028	$49.5	$12.4	$6.1	22.40

🧮 Peer Valuation Snapshot

Company	P/E	P/FCF	D/E	Revenue Growth	EPS Growth
Deere	20.8	27.1	0.78	-30% (Q1)	-30% YoY
CNH	12.3	19.7	1.02	-20%	-15%
AGCO	13.2	16.4	0.65	-18%	-22%
Caterpillar	18.6	25.0	1.18	+3%	+8%

🧮 Peer Valuation (with Forward EPS & Long-Term Estimates)

Company	Current P/E	Forward EPS (2026 Avg)	Debt/Equity	Est. Rev Growth (2025–26)	Notes
Deere (DE)	20.8	$20.23	0.78	📉 -5%	EPS rebound expected by 2026 via margin recovery, driven by automation & precision ag margin expansion.
CNH Industrial	12.3	$0.94	1.02	📉 -8%	Value-priced, but faces EPS drag from ag sector weakness and margin compression.
AGCO Corp.	13.2	$4.70 (2026 Avg)	0.65	📉 -5%	Undergoing inventory reset; upside likely in 2027–28 from EPS recovery and margin normalization.
Caterpillar (CAT)	18.6	$22.12 (2026 Avg)	1.18	📈 +3.5%	Strong global infra tailwinds; high capital return profile, but more cyclical than ag peers.

✨ Observations:

✅ Deere commands a premium valuation, backed by its precision ag moat, recurring revenue, and projected EPS CAGR of 7–8%.
⚠️ CNH is attractively priced, but structurally challenged near-term by softer demand and weaker operating leverage.
📈 AGCO is mispriced for its upside, especially with EPS set to reach $4.80–$5.00 by 2028, assuming steady ag recovery.
🏗️ Caterpillar is the cyclical bellwether, with stable forward earnings and strong dividend-backed returns.

🔍 Insider & Institutional Sentiment

👤 Insider Activity : Minimal buying/selling activity in Q1; signals alignment but no aggressive insider confidence buying

🏛 Institutional Flows : Long-only funds trimmed exposure ~1.4% in Q1, citing macro overhangs; however, activist funds remain constructive

📊 Forward Financial Estimates (2025–2028) for Peers

CNH Industrial N.V. (CNHI)

Year	Revenue (B)	Net Income (B)	EPS
2025	$28.03	$1.12	$0.69
2026	$29.18	$1.52	$0.94
2027	$29.07	$1.71	$1.06
2028	$24.34	$0.98	$1.69

📉 Revenue drop expected in 2028 due to end-market softness and lower ag exposure.

AGCO Corporation (Projected)

Year	Revenue (B)	EBITDA (B)	Net Income (B)	EPS
2025	$9.60	$0.75*	$0.45*	$4.00–$4.50
2026	$9.89	$0.79	$0.47	$4.70
2027	$10.19	$0.81	$0.48	$4.80
2028	$10.50	$0.84	$0.50	$5.00

*2025 based on management guidance; later years extrapolated from historical growth (~3% CAGR) and normalized margins.

Caterpillar Inc. (CAT)

Year	Revenue (B)	Net Income (B)	EPS
2025	$64.81	$9.53	$19.65
2026	$66.80	$10.73	$22.12
2027	$68.80	$11.79	$24.31
2028	$70.86	$12.85	$26.50

📌 Despite softening 2025 dealer purchases, long-term growth remains intact due to global infrastructure programs and mining cycle strength.

💎 Valuation & Intrinsic Value

📌 Valuation Ratios (FY24)

Metric	Value
Forward P/E	20.8
EV/EBITDA	13.5
P/FCF	27.1
FCF Yield	~3.69%

📉 DCF Valuation Summary

📈 Growth Rate (CAGR): 6.5%
📉 Discount Rate: 9.5%
🏁 Terminal Growth: 2.5%
📌 Intrinsic Value: $395–$425/share

🎯 Margin of Safety: ~10–15% at current levels → Accumulate on dips

💸 Dividend Snapshot

Metric	Value
Dividend Yield	~1.15%
Payout Ratio	~21%
5-Year Dividend CAGR	~6.8%
Dividend Cuts	❌ None

✅ Verdict: Steady & Shareholder-Friendly 🌱

☪️ Shariah & 🌍 ESG Snapshot

🕋 Shariah Compliance

✅ Debt/Assets: ~0.78 → Likely compliant
⚠️ Interest Income: Present, but not dominant
✅ Core Business: Fully permissible

📌 Verdict: Likely Compliant, pending full certification

♻️ ESG Profile

Dimension	Status	Notes
🌿 Environmental	✅ Strong	Precision Ag, R&D in climate-smart tools
🤝 Social	✅ Positive	Skilled workforce, Brazil tech center
🏛️ Governance	✅ Solid	Transparent board, capital discipline

📌 Overall ESG Verdict: Strong & Improving

🧭 Final Investment Summary

⏳ Short-Term (2025–2026):

⚠️ Speculative Buy – Near-term pain priced in; margin of safety emerging

🌅 Long-Term (2027+):

✅ Strong Buy – Deere remains a secular winner in ag-tech and machinery

🧠 Key Takeaways

🔧 A legacy brand undergoing a tech renaissance
🚜 Precision ag & autonomy poised to transform farming forever
📈 Shareholder returns remain resilient
🌍 Sustainable, ethical, and globally expanding

🧾 Disclaimer

This report is for educational purposes only and does not constitute investment advice. Always consult with a licensed advisor before making financial decisions.