Construction and small agriculture are recovering, costs are being cut and shares jumped 4.7% before the bell — here’s what changed
Deere & Co has been navigating a rough patch for a while now. Farmers have been holding off on big equipment purchases, crop prices have stayed stubbornly low and tariff-driven production costs have eaten into margins in ways that were hard to offset. For a company that makes its living selling green and yellow tractors to people who are themselves having a difficult year, the math has not been particularly friendly.
On Thursday, something shifted. The world’s largest farm equipment maker raised its full-year profit forecast, pointing to a genuine recovery in two of its key business segments and a cost-cutting effort that is starting to show real results. Shares jumped 4.7% in premarket trading — which, in Wall Street terms, is the financial equivalent of a standing ovation.
What the new numbers actually look like
Deere now expects 2026 net income to land between $4.5 billion and $5 billion. That is a meaningful upgrade from the prior forecast of $4 billion to $4.75 billion — roughly half a billion dollars of additional confidence at the midpoint. For context, the company posted net income of $656 million for the first quarter alone, or $2.42 per share, down from $869 million a year ago but arriving alongside first-quarter revenue of $9.61 billion — a 13% jump from the $8.50 billion reported in the same period last year.
The revenue growth matters here. A company cutting costs while revenue climbs is telling a different story than one cutting costs because revenue is falling.
Where the recovery is actually coming from
The upgrade is being driven primarily by two segments that had been among the more troubled parts of the business: Small Agriculture and Turf, and Construction and Forestry. Deere now expects net sales in both to rise approximately 15% in 2026, up from an earlier forecast of roughly 10% growth in each.
Construction demand picking back up is a notable signal. It suggests that activity in the broader economy — infrastructure projects, land development, commercial building — is providing a floor that the struggling large agriculture segment has not been able to offer on its own. Small agriculture, which covers equipment for hobby farms, landscaping and lighter-duty operations, is showing similar resilience.
The headwinds that haven’t gone away
The raised forecast does not mean Deere is operating in clear skies. U.S. farmers are heading into another difficult season — ample global grain supplies are keeping crop prices low, input costs remain elevated and many farmers are still delaying or skipping major equipment purchases altogether. Deere has responded by scaling back factory production and working with its dealer network to draw down inventory, but large agriculture demand remains a genuine challenge.
Tariffs continue to complicate the picture as well. Deere relies heavily on imported raw materials to manufacture its equipment, and the sweeping trade policies introduced by the Trump administration have pushed production costs higher in ways that take real effort to absorb. The company is managing it, but it is not invisible in the earnings.
What this signals for the rest of the year
The raised forecast carries an implicit message beyond the numbers: Deere’s leadership believes the worst is behind them. The current cycle appears to be bottoming out in large agriculture, while construction and small agriculture are already climbing back. Cost discipline is working. And the revenue line is moving in the right direction even as the farm economy continues to grind through a difficult period.
For investors who have been watching a company deal with weak demand, high costs and trade headwinds simultaneously, Thursday’s update offered something that had been in short supply — a reason to feel better about where things are heading.
