MOLINE, Illinois, August 20, 2026, 08:50 CDT — U.S. cash trading remained open.
- Construction & Forestry accounted for 69% of the rise in Deere’s segment profit.
- The tariff refund of $110 million was higher than the $90 million quarterly net income increase.
- Deere increased the lower end of its 2026 profit outlook to $4.75 billion.
Deere & Company NYSE:DE recorded its first rise in quarterly profit in three years, driven primarily by construction demand related to data centers. Shares advanced 2.7% ahead of Thursday’s market open.
Deere’s construction division contributed $199 million of the $288 million rise in segment profit, accounting for 69%. This highlights that AI infrastructure investment is offsetting decreased demand in agricultural machinery.
The strength of the headline beat is uncertain. Deere recorded $110 million from tariff recoveries, while quarterly net income increased by just $90 million. The refund outpaced the total reported gain.
| Fiscal Q3 2026 | Result | Comparison |
|---|---|---|
| Net sales and revenue | $12.608 billion | Up 5% from a year ago |
| Equipment net sales | $10.999 billion | Up 6.2% compared to last year |
| Net income | $1.379 billion | 7% higher year over year |
| Diluted EPS | $5.10 | Analysts expected $4.69 |
| Tariff recoveries | $110 million | Disclosed by the company |
Deere’s earnings surpassed forecasts, reporting $5.10 per share versus the $4.69 consensus referenced by The Wall Street Journal. Equipment net sales were also above estimates at $11.0 billion.
| Equipment segment | Net sales | Sales change | Operating profit | Profit change |
|---|---|---|---|---|
| Production & Precision Ag | $3.998 billion | -6% | $527 million | -9% |
| Small Ag & Turf | $3.383 billion | +12% | $622 million | +28% |
| Construction & Forestry | $3.618 billion | +18% | $436 million | +84% |
The Construction & Forestry segment drove performance, with sales rising 18% and operating profit surging 84%. The unit’s margin increased to 12.1%, compared to 7.7% in the prior year.
Production & Precision Agriculture declined, with sales decreasing 6% and profit down 9%. The margin for the segment narrowed to 13.2%, compared to 13.6% previously.
| Segment profit bridge | Q3 2026 compared to Q3 2025 | Portion of overall increase |
|---|---|---|
| Construction & Forestry | +$199 million | 69% |
| Small Ag & Turf | +$137 million | 48% |
| Production & Precision Ag | -$53 million | -18% |
| Financial Services | +$5 million | 2% |
| Total segment operating profit | +$288 million | 100% |
Chief Executive John May noted that initial orders and better used-equipment inventory levels back up the trough outlook. “We continue to believe 2026 will mark the bottom of the current ag equipment cycle,” he said. Deere
Management lifted the lower bound of its full-year net income forecast to a new range of $4.75 billion to $5.00 billion. Previously, three months earlier, Deere had projected net income between $4.50 billion and $5.00 billion.
| 2026 forecast | Earlier | Latest |
|---|---|---|
| Net income | $4.50B–$5.00B | $4.75B–$5.00B |
| Production & Precision Ag revenue | Lower by 5%–10% | Lower by roughly 10% |
| Small Ag & Turf revenue | Increase of about 15% | Increase of about 15% |
| Construction & Forestry revenue | Gains around 20% | Gains around 20% |
The higher floor is significant. However, the midpoint increases just $125 million, nearly matching a single quarter’s tariff recovery. Investors therefore require more proof of an operational low point.
| Analyst stance before Q3 | Rating | Target | Date |
|---|---|---|---|
| S&P Global survey, 24 analysts | Buy | $647.62 on average; range $500–$812 | August 12, 2026 |
| JPMorgan | Neutral | $550 | April 10, 2026 |
| Barclays | Overweight | $640 | March 31, 2026 |
| Argus | Buy | $700 | March 3, 2026 |
The analyst estimates vary significantly, spanning from $500 to $812. The gap highlights two opposing perspectives: a cyclical downturn in farming versus a premium attributed to construction and precision technology divisions.
Risks: Delays in large-equipment orders could result from shifts in crop prices and farm income. Reported gains may be undone by changes in tariff policy. Reduced data-center construction would diminish the effectiveness of the portfolio hedge.
A clearer transition is needed for the next quarter. Deere has demonstrated that strength in construction can balance weakness in agriculture. However, it has yet to show evidence that the agricultural cycle is improving without the aid of refunds.
Related articles: NYSE:DE
Construction carries the profit bridge
Segment operating-profit change
Why 69% matters
Segment scorecard
| Segment | Sales | YoY | Margin | Signal |
|---|---|---|---|---|
| Production & Precision Ag | $4.00B | -6% | 13.2% | Downcycle |
| Small Ag & Turf | $3.38B | +12% | 18.4% | Strong |
| Construction & Forestry | $3.62B | +18% | 12.1% | Driver |
Guidance reset
Analyst target range before Q3
Price context
Construction gives Deere a real earnings hedge. But the clean test comes next: large-farm orders must stabilize while construction margins hold after the tariff refund rolls away.
