Deere Raises 2026 Profit Outlook as Construction Demand Offsets Agricultural Weakness

Deere & Company raised the lower end of its full-year profit forecast Thursday after reporting stronger-than-expected quarterly results, helped by growing demand for construction equipment even as its large agricultural machinery business remained under pressure. Shares of DE rose in premarket trading following the earnings announcement.

The equipment manufacturer reported fiscal third-quarter net income of approximately $1.38 billion, compared with about $1.29 billion in the same period a year earlier. Earnings reached $5.10 per share, exceeding analysts' expectations. Total revenue rose to roughly $12.6 billion, while net sales increased to about $11 billion.

One of the strongest areas of the quarter was Deere's construction and forestry division. Sales in that segment climbed about 18% from a year earlier as demand increased for equipment used in infrastructure development. Growth associated with data-center construction and other large-scale projects helped provide an important counterweight to continued weakness in traditional farm equipment markets.

The company's core production and precision agriculture segment remained challenged. Sales in that division declined approximately 6% as farmers continued to limit purchases of expensive machinery amid lower crop profitability and elevated operating costs. The agricultural equipment downturn has weighed on Deere for several quarters, but management indicated that conditions may be approaching a cyclical low.

Deere's smaller agriculture and turf operation performed considerably better, with sales rising about 12%. Stronger livestock economics, including improved milk and beef prices, helped support purchasing activity among customers in that segment.

The quarter also benefited from approximately $110 million in tariff-related refunds, providing an additional boost to earnings. Even without that benefit, the combination of stronger construction demand and improved performance in selected equipment categories helped the company deliver its first year-over-year quarterly profit increase in nearly three years.

Management now expects full-year 2026 net income of approximately $4.75 billion to $5 billion, raising the bottom end of its previous forecast range. The revised outlook indicates greater confidence in the company's ability to navigate weak agricultural demand while benefiting from improving conditions elsewhere in its portfolio.

Company leadership also expressed optimism that 2026 could represent the low point of the current agricultural equipment cycle. If farm economics eventually improve, replacement demand for large tractors, combines and precision agriculture equipment could provide another source of growth on top of the company's current strength in construction.

For investors in DE, the latest results demonstrate how Deere's diversification beyond large farm machinery is helping stabilize earnings during an agricultural downturn. Future performance will depend on whether construction demand remains strong and whether the company's core farming customers begin increasing capital spending as agricultural conditions improve.