Deere & Company (NYSE: DE) reports second-quarter fiscal 2026 earnings on Thursday, May 21, and the setup is notably more complicated than the blowout first quarter that sent the stock up 11.6% on a single day in February.
Analyst consensus currently projects EPS of $5.81 on a diluted basis, representing a 12.5% year-on-year decline from the $6.64 posted in the same period last year. Revenue expectations are more constructive, with full-year guidance from management implying approximately 3.3% top-line growth. Some independent analysis is more bullish, with one Seeking Alpha contributor projecting Q2 EPS of $6.91 and modelling 6% revenue growth, arguing the street is underestimating operating leverage in the current environment.
The Q1 result that underpins the optimistic case was genuinely exceptional. Deere posted revenue of $9.6 billion against a consensus of $7.5 billion, a beat of more than $2 billion, while adjusted EPS of $2.42 cleared the $1.90 estimate by 27%. The company then raised its full-year net income guidance following those results, pointing to improving momentum in the Small Agriculture & Turf and Construction & Forestry divisions even as the flagship large agriculture Business faces structural headwinds. That divergence between divisions is part of why the Q2 outlook is more nuanced than the headline EPS decline implies.
The structural pressures are real. US farmer incomes are projected to fall 15% in 2026 according to industry forecasts, driven by a combination of commodity price weakness, elevated input costs and the delayed effect of prior years’ high interest rates on equipment purchasing decisions. Deere also faces an estimated $1.2 billion in direct tariff costs for the full fiscal year, a figure that is being managed through pricing adjustments and supply chain adaptation but which nonetheless compresses operating margins in the affected segments. High-horsepower equipment sales have been in a prolonged downturn, and the company has been managing production schedules accordingly to avoid inventory build.
The more cautious market signal comes from Zacks, whose earnings model generated a negative Earnings ESP of minus 8.26%, indicating that the most accurate recent estimates have been tracking below the consensus figure. Deere has beaten consensus EPS estimates in three of its last four quarters, but the miss was in Q3 of last year, meaning the track record is strong rather than perfect. For investors deciding whether to position ahead of the print, the question is whether the Q1 strength in non-agricultural divisions extends into Q2 at a magnitude sufficient to offset the large agriculture softness.
The stock has performed remarkably well given the macro headwinds, gaining approximately 26% year to date through mid-May. That performance partly reflects market confidence that the current agricultural cycle trough is finite and that normalisation of both commodity prices and farm incomes through 2027 will rebuild demand for large equipment. Deere’s technology-driven precision agriculture offerings also provide a secular growth layer that is less exposed to year-to-year commodity volatility than traditional hardware sales, and analyst consensus holds at a “moderate buy” with targets pointing to further upside from current levels.
The earnings call on May 21 will be scrutinised primarily for management commentary on the pricing environment, order books for the second half of fiscal 2026, and any update to full-year guidance. Given the $1.2 billion tariff headwind and the scale of the Q1 beat, the guidance range that management chose to maintain rather than raise may prove conservative, which is exactly the kind of setup that has driven previous earnings surprises for the company.