Deere (DE): Evaluating Valuation After Q3 Earnings Dip and Shifting Growth Bets in Tech and Global Markets

If you have been debating what to do with Deere lately, you are not alone. The company’s recent third-quarter results revealed a decline in both revenue and net income compared to last year, and Deere lowered its earnings guidance for 2025. At the same time, management is doubling down on robotics and AI-powered machinery, and market watchers are noticing some encouraging trends overseas, especially in Europe and Latin America. For investors, it is a classic case of bad headlines appearing alongside longer-term optimism.

Looking at the stock’s performance, Deere has managed to defy the short-term negativity. Shares are up 31% over the past year, with momentum building throughout 2025 despite a dip of 4% this month and a small pullback over the past 3 months. This resilience in the face of softer earnings and tighter guidance is drawing attention for a reason. The stock’s long-term five-year return now sits above 150%, while management’s strategic moves are increasingly focused on future growth levers beyond traditional farm equipment.

So, after a year where Wall Street seems willing to look past near-term challenges for Deere, is there real value hidden here for buyers, or is the market already counting on the next phase of growth?

Most Popular Narrative: 7.3% Undervalued

According to community narrative, Deere is currently seen as undervalued despite recent earnings volatility. The fair value estimate is notably higher than the current share price. The valuation is based on the company's projected earnings growth, margin expansion, and anticipated improvements in global demand for its technology-driven equipment.

Rapid adoption of Deere's precision agriculture and automation solutions (such as JDLink Boost, Precision Essentials bundles, See & Spray technology, and new automation features) is driving higher-value product sales and increased software engagement globally. This positions Deere to benefit from shifts toward high-efficiency, technology-enabled farming, which could lift both future revenue and net margins through higher-margin recurring software and data services.

How has Deere's high-tech overhaul changed its bottom line? One surprising set of financial assumptions is at the core of this fair value. Interested in which future performance metrics are considered game-changers and how bullish estimates are stacking up? This is the narrative the market is watching.

Result: Fair Value of $534.85 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent trade tensions and a substantial drop in large equipment sales across North America could quickly challenge even the most optimistic outlooks for Deere.

Find out about the key risks to this Deere narrative.

Another View: Is the Discount Real?

Shifting gears, our DCF model paints a strikingly similar picture for Deere. This suggests the shares are still trading below what future cash flows could justify. However, do real-world risks make this discount more illusion than opportunity?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Deere for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Deere Narrative

If you are interested in exploring further or want to develop your own perspective, creating a custom Deere narrative takes just a few minutes. do it your way.

A great starting point for your Deere research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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