Deere’s second quarter saw a disappointing market reaction as revenue missed Wall Street’s expectations, driven by a 9% year-over-year sales decline. Management attributed underperformance to challenging end market conditions, elevated tariffs, and persistent caution among customers, especially in North America. CFO Josh Beal described the period as one marked by “uncertainty in the industry fundamentals and evolving global trade environment,” highlighting that elevated inventory levels and high interest rates continued to weigh on large equipment demand. Despite these headwinds, Deere noted improved retail activity in some European and North American segments, but overall, the company faced cost pressures and negative price realization as it worked to clear used equipment.
Is now the time to buy DE? Find out in our full research report (it’s free).
Deere (DE) Q2 CY2025 Highlights:
- Revenue: $10.36 billion vs analyst estimates of $11.75 billion (9% year-on-year decline, 11.8% miss)
- Adjusted EPS: $4.75 vs analyst estimates of $4.55 (4.3% beat)
- Adjusted EBITDA: $2.13 billion vs analyst estimates of $1.85 billion (20.6% margin, 15.3% beat)
- Operating Margin: 15.1%, down from 20.2% in the same quarter last year
- Market Capitalization: $133.4 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Deere’s Q2 Earnings Call
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Tami Zakaria (JPMorgan) asked how production plans would adjust if retail sales rise next year. CFO Josh Beal explained that after significant underproduction this year, production would increase in line with retail demand, particularly in small ag and construction.
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Angel Castillo (Morgan Stanley) inquired about early order program trends for planters and combines. Beal said planter orders remain cautious, with most customers waiting until deadlines, while combine orders have shown some early positive response but are too preliminary to draw conclusions.
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Steven Michael Fisher (UBS) questioned the ability to pass along tariff costs through higher prices. Beal and CFO Joshua Jepsen noted that some 2026 model pricing is coming through, but competitive pressures and incentive programs limit immediate price realization.
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Kristen Owen (Oppenheimer) sought clarity on the composition and mitigation of tariff impacts. Management detailed that Europe and steel accounted for about half the increase, with ongoing supply chain shifts and price actions being taken to help offset future costs.
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Charles Albert Edward Dillard (Bernstein) asked about the effect of increased dealer incentives for used equipment on trade cycles. President Cory Reed responded that incentives allow more flexibility for both dealers and customers, helping to stabilize used prices and facilitate trades despite elevated interest rates.
Catalysts in Upcoming Quarters
In coming quarters, StockStory analysts will watch (1) whether Deere’s inventory reductions translate into improved production volume as markets recover, (2) the company’s ability to offset ongoing tariff and input cost pressures through pricing and supply chain adjustments, and (3) adoption rates for new precision agriculture technologies. Progress on trade policy and biofuel-related demand will also be important markers for future performance.
Deere currently trades at $492.90, down from $513.02 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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