By Al Root
Farmers are getting squeezed by rising prices for key crop inputs. It's starting to unnerve Deere investors. They will find out how bad things are when the ag-equipment maker reports fiscal second-quarter numbers on Thursday.
For the quarter, Wall Street is looking for earnings per share of $5.70 from equipment sales of about $10.3 billion. A year ago, Deere reported earnings per share of $6.64 from equipment sales of about $11.2 billion.
Sales in Deere's large agricultural equipment business are expected to decline, which reflects trouble down on the farm.
Benchmark corn prices are about $4.70 per bushel, up from $4.40 at the end of 2025. Higher crop prices are a positive, but fertilizer prices have gotten expensive following the war with Iran. A lot of fertilizer is made from oil or natural gas.
Overall, the USDA expects farmers to make about $153 billion in 2026, flat with 2025, and down from a record $182 billion earned in 2022. Flat is OK, but growth would make it easier to sell equipment to farmers.
Deere is expected to earn less money in fiscal year 2026 than in fiscal year 2025. That was OK for investors, who were willing to wait for a turn in the farming cycle.
Deere stock was performing well and shot up 11.6% after reporting better-than-expected first-quarter earnings in February. A guidance boost helped. Deere raised its fiscal 2026 net income guidance to $4.5 billion to $5 billion. The prior range given in November was $4 billion and $4.75 billion. Deere earned about $5 billion in net income in fiscal year 2025.
Then came the war. Coming into the Wednesday trading, Deere stock was down 11% since the fighting started and oil prices shot higher.
Now, investors don't seem to know what to do. Deere's peers, AGCO and CNH Industrial, have already reported March-quarter numbers. AGCO reported better-than-expected income and raised guidance. Shares dropped 5.6%. CNH reported better-than-expected income. It maintained its earnings-per-share guidance of about 40 cents. Shares rose 6.3%.
Recent trading left CNH at about 20 times estimated earnings expected over the coming 12 months, up from about 19 times a year ago. AGCO trades for about 17 times, down from 22 times a year ago. Deere stock trades for 27 times, up from 26 times a year ago.
Based on recent trading, what happens to Deere stock on Thursday is anyone's guess. Option markets imply Deere stock will move about 5% up or down following earnings.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 20, 2026 16:36 ET (20:36 GMT)
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