Deere & Company: The Right-to-Repair Nexus — FTC Targets the Same Moat That Makes DE Defensible
Every analytical lens we ran on Deere converged on the same finding: the FTC right-to-repair lawsuit sits at the intersection of moat durability, revenue composition, regulatory trajectory, and stress resilience. The proprietary diagnostic tools that create switching costs are the same tools the government is suing to pry open. Five lenses. Eight signals. One central risk variable.
This is a summary of our full DE analysis →
The Numbers That Matter
Down 25% from FY2023 peak
vs. 2016 trough (12.6% vs. 8.1%)
$1.2B tariffs + $1.2B labor
Record — up through 25% revenue decline
The Central Question
Deere & Company is the world's largest agricultural equipment manufacturer — $45.7B in FY2025 revenue, a $64.7B financial services portfolio, and record $2.31B R&D investment in precision agriculture technology. The company enters FY2026 at a cyclical trough with revenue down 25% from peak, facing an active FTC right-to-repair lawsuit (motion to dismiss denied June 2025), $1.2B in tariff costs, a CFO departure, and 5 state co-plaintiffs aligned with the federal government.
We ran Deere through five analytical lenses — Moat Mapper, Regulatory Reader, Stress Scanner, Gravy Gauge, and Black Swan Beacon — to assess whether the convergence of headwinds represents a temporary compression or a structural inflection. What emerged was a company with genuine defensive qualities facing a risk that targets the exact mechanism those defenses depend on.
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Opus + Sonnet ensemble. 5 lenses. 8 signals. 22 debates. Full evidence citations.
What Five Lenses Found: 8 Signals
Five independent analytical lenses produced 8 signal assessments and resolved 22 debates through structured adversarial discourse. The consistent theme: structurally improved franchise, cyclically compressed, with a single risk variable that touches every signal. All 5 lenses independently converged on the FTC right-to-repair lawsuit as the central analytical variable.
Two independent moat layers: technology ecosystem (precision ag, 500M+ engaged acres) and physical distribution (2,200+ dealer locations). But depth is uneven — only 20-30% of customers deeply engaged with precision ag. The 70-80% with shallow engagement have moderate switching costs at best.
FTC right-to-repair lawsuit (MTD denied), DOJ statement of interest, 5 state co-plaintiffs, independent state legislation, $1.2B tariff headwind. Material but not existential — core equipment manufacturing is not built on regulatory arbitrage.
Core equipment revenue (~75-85%) is structurally durable. But 50%+ swings 25-30% with the agricultural commodity cycle, and aftermarket (est. 15-25%) faces direct FTC pressure. Revenue is recoverable but not stable in any 2-year window.
Equipment Operations generates $5B+ cash flow, but the $64.7B Financial Services portfolio amplifies rate/credit sensitivity. $2.4B combined tariff+labor headwind compresses flexibility to historically tight levels.
Counter-cyclical R&D discipline ($2.31B, protected through 25% revenue decline) is strongly positive. Pro-cyclical buyback program (heavy at peak, paused at trough) and CFO transition during trough are negatives.
Three compound failure scenarios at 5-15% probability each. 'Perfect Storm' scenario could force dividend freeze and trigger distress signal to farmer/dealer base. Worst plausible scenario creates 30-50% value impairment.
Committee conclusions depend on three shared assumptions: cyclical recovery (well-supported), narrow FTC remedy (uncertain), and structural margin durability (partially decomposed). Breaking the FTC assumption shifts 3+ lens conclusions.
All 4 analytical lenses assumed a narrow FTC remedy — none modeled a broad remedy (data portability, platform interoperability). The 2016 cyclical analog is overused: 2026 has 4 additional stress vectors not present in 2016.
The Right-to-Repair Nexus: Why All 5 Lenses Converged
In most multi-lens analyses, each lens identifies its own primary risk. What made the Deere analysis unusual is that every lens — from competitive moat to revenue durability to tail risk — converged on the same variable: the FTC right-to-repair lawsuit and the proprietary diagnostic tools at its center.
Moat Mapper: The switching cost engine
Deere's Service ADVISOR proprietary diagnostic system is the mechanism that creates switching costs for the 20-30% of deeply-engaged precision ag customers. Without it, equipment that breaks down requires a Deere dealer to diagnose — locking in the relationship. The FTC is targeting this exact mechanism. Estimated impact under adverse ruling: 3-6% of equipment gross profit.
Regulatory Reader: The core of the lawsuit
FTC lawsuit filed January 2025. Motion to dismiss denied June 2025. DOJ filed a statement of interest in the parallel private class action. Five states joined as co-plaintiffs. Independent state right-to-repair legislation operating on a separate track. This is not a single-vector regulatory risk — it is a multi-front convergence.
Gravy Gauge + Stress Scanner: The revenue at risk
Aftermarket parts and service revenue — estimated at 15-25% of equipment revenue — is the highest-margin stream and the one directly threatened by right-to-repair remedies. Deere does not separately disclose this figure. Every lens flagged this opacity as a critical analytical barrier.
Black Swan Beacon: The compound scenario
The "Regulatory Cascade" scenario (8-15% probability): FTC broad consent decree forces open Service ADVISOR, state legislatures pass broader agricultural data rights laws, third-party platforms import farmer data, technology switching costs erode for 70-80% of the customer base. Moat shifts from DEFENSIBLE to CONTESTED over 3-5 years.
Cyclical Trough — But Not the Same Trough
Deere's prior cyclical trough in 2016 is the most common analog cited by analysts. Revenue declined 26% from FY2013 to FY2016, then recovered over 7 years to $61.3B by FY2023. Three of our five lenses used this analog. But the Black Swan Beacon flagged a critical difference.
- +450bps margin improvement — 12.6% trough vs. 8.1% in 2016, providing meaningful downside protection
- Record R&D — $2.31B (5.1% of revenue), up 6% even as revenue declined 25%. Counter-cyclical discipline.
- Precision ag at scale — 500M+ engaged acres, technology ecosystem deployed vs. nascent in 2016
- Dealer inventory at 17-year lows, historically a leading indicator of recovery
- $2.4B cost headwinds — $1.2B tariffs + $1.2B labor. 2016 had $0 in tariff costs.
- FTC lawsuit — No precedent in the prior cycle. Active federal litigation targeting core business model.
- Larger FS portfolio — $64.7B creates amplified sensitivity to rate and credit cycles
- CFO transition — Jepsen departure effective Feb 19, 2026, during maximum operational stress
Where Our Models Disagreed
Across 5 lenses, 22 debates were resolved through structured adversarial discourse. Two highlight genuine analytical uncertainty that the analysis could not resolve.
Is the 450bps margin improvement structural or cyclical?
150-250bps attributable to moat-specific factors (technology switching costs), remainder to operational efficiency. R&D discipline and precision ag deployment provide evidence of permanent improvement.
Explicitly questions whether the improvement is technology-driven (durable) or mix/pricing-driven (cyclical). If primarily mix-driven, it may reverse in the next upturn as lower-margin segments recover.
Resolution: Likely blended — 150-250bps structural (moat-specific), remainder uncertain. The full 450bps should not be assumed permanent without further evidence.
Financial Services: Shock absorber or shock amplifier?
Financial Services provides through-cycle revenue stability that partially offsets equipment cyclicality. In moderate stress, it cushions the downturn.
The $64.7B portfolio creates amplified rate/credit sensitivity. A 1-notch rating downgrade costs $160-295M annually. Under severe compound stress, FS becomes a negative feedback loop.
Resolution: Both are correct for different scenarios. Moderate stress = stabilizer. Severe compound stress = amplifier. The key variable is whether FS credit losses remain contained during agricultural downturns.
The $2.4B Headwind Gauntlet
FY2026 presents an unprecedented convergence of cost pressures: $1.2B in tariff costs (industry-wide, $300M/quarter run rate) and $1.2B in labor headwinds. This $2.4B combined figure is embedded in Deere's FY2026 guidance of $4.0-4.75B net income, but it compresses financial flexibility to historically tight levels.
The tariff component is partially offset by 3-4% pricing on large tractors and Deere's significant U.S. manufacturing footprint. But the labor component adds structural cost pressure that does not reverse when trade policy changes. Together, they reduce the margin of safety that the 450bps structural improvement was supposed to provide.
What to Watch
Twenty-four monitoring triggers across all five lenses. These are the highest-priority items.
Guidance revision, tariff update, litigation commentary, credit quality, and CFO transition details. This single event may materially update 4 of 5 signals. The most important near-term catalyst.
FTC remedy scope is the single variable that determines whether the moat and regulatory assessments coexist or conflict. Case briefings, commissioner statements, or settlement language indicating broad vs. narrow scope are the highest-information data points.
Financial Services credit quality is the key variable that determines whether the $64.7B portfolio stabilizes or amplifies the downcycle. Watch quarterly credit metrics closely.
Used equipment residual values are a leading indicator of the cyclical turn. Declines beyond 30-35% from peak would escalate tail risk severity and funding fragility assessments.
State-level legislation operates independently of the federal case and may produce broader remedies than the FTC seeks. Each new state adds regulatory complexity and compliance costs.
The Tail Risks
The Black Swan Beacon identified three compound failure scenarios with defensible mechanisms and historical analogs. The consensus blindspot: all four analytical lenses assumed a narrow FTC remedy, but the committee estimated only 50-60% probability of narrow, with 25-35% moderate and 10-20% broad.
Regulatory Cascade
FTC broad consent decree forces open Service ADVISOR. State legislatures pass broader agricultural data rights laws. Third-party platforms import farmer data. Technology switching costs erode. Competitive position shifts from DEFENSIBLE to CONTESTED over 3-5 years. Analog: Microsoft antitrust, 1998-2008.
Perfect Storm
Q1 FY2026 guidance cut below $4.0B floor + FS delinquencies rise 30%+ + rating agency downgrade + cash compression forces dividend freeze + freeze signals distress to farmer/dealer base, extending the trough. Analog: Caterpillar 2015 (revenue declined 30%, 31,000 headcount cuts).
Governance Gap
CFO transition during maximum operational and regulatory stress creates a leadership vacuum. Capital allocation decisions deferred. Settlement negotiations with FTC lack dedicated financial leadership. Contained severity but compounding if it intersects with either of the above scenarios.
Bottom Line
Deere & Company is a structurally improved franchise at a cyclical trough — but the improvement is being stress-tested by an unprecedented convergence of regulatory, macroeconomic, and policy headwinds. The right-to-repair lawsuit is not just one risk among many; it is the central analytical variable that determines whether the technology moat widens or gets forced open. The 450bps margin improvement and record R&D provide genuine structural resilience. The question is whether that resilience is sufficient to absorb the $2.4B headwind gauntlet while the FTC case plays out over 2-5 years.
The committee posture is HIGHER SCRUTINY — not because the long-term position is weak, but because the near-term concentration of risks around a single variable (FTC remedy scope) creates a wider range of outcomes than Deere has faced in any prior cycle. The Q1 FY2026 earnings call on February 19 may materially update the picture.
Full Analysis with Signal Breakdowns
Explore the complete five-lens assessment including debate transcripts, evidence citations, and monitoring triggers across Moat Mapper, Regulatory Reader, Stress Scanner, Gravy Gauge, and Black Swan Beacon.
View DE AnalysisPublic Sources Used
This analysis was powered by the following publicly available documents:
- Annual Report (10-K) — FY2025
- Quarterly Report (10-Q) — Q3 FY2025
- Quarterly Report (10-Q) — Q2 FY2025
- Quarterly Report (10-Q) — Q1 FY2025
- Quarterly Report (10-Q) — Q3 FY2024
- Current Reports (8-K) — Q1-Q4 FY2025 earnings releases
- Current Report (8-K) — CFO transition (Jan 20, 2026)
- Proxy Solicitation (DEFA14A) — Jan 14, 2026
- Q4 FY2025 Earnings Call Transcript
- Q3 FY2025 Earnings Call Transcript
- Q2 FY2025 Earnings Call Transcript
- Q1 FY2025 Earnings Call Transcript
- FTC Right-to-Repair Lawsuit Summary
- Bull/Bear Thesis Compilation (Insider Monkey, Primary Ignition, AInvest, Morningstar)
- Strategic Pivot Analysis (Primary Ignition, Jan 2026)
- CourtListener Litigation Records — 10 cases