DE Q1 FY2026: Guidance Raised to $4.5-5.0B, All 8 Signals Confirmed

Deere reported Q1 FY2026 net income of $1.246B on $8.54B revenue, with equipment operations margin of 5.9% — ahead of the guided “low single digits.” Management raised NI guidance from $4.0-4.75B to $4.5-5.0B (+$375M midpoint) and cash flow guidance by $500M. Our five-lens committee re-evaluated all eight signal classifications against the new data. Result: full confirmation with positive drift. All signals maintained at prior levels. The prediction ensemble updated seven forecast markets and resolved one, with the largest shift in the net income market: 28% → 9%.

The Numbers

$4.5-5.0B

NI Guidance

Raised from $4.0-4.75B

$750M

Q1 Capital Return

Buybacks resumed

99%

Harvest Auto

80% Ultimate, +4-5pts YoY

8 / 8

Signals Confirmed

No classification changes

C&F order bank up 50% (highest since May 2024), SAT guidance raised 5 points, and used equipment clearing at an “accelerated pace.” Technology adoption continues deepening: highly engaged acres grew +25% YoY with 30% throughput improvements and 50% herbicide savings reported. Financial Services credit quality improving with lower provisions and favorable spreads. South America softened (industry now -5%).

Prediction Ensemble: Seven Markets Updated, One Resolved

The Q1 data triggered prediction updates on all seven active markets. The precision agriculture adoption market resolved YES with a Brier score of 0.10 (good calibration at 68% prediction). Five financial/cyclical markets shifted lower, two regulatory markets held essentially flat.

FY2026 NI below $4.0B28% → 9%0.96 agreement

Dividend increase in FY202678% → 87%0.96 agreement

FS delinquency spike >25%22% → 13%0.97 agreement

Used equipment pricing −10%22% → 13%0.97 agreement

Credit rating action17% → 10%0.97 agreement

FTC settlement by Dec 202632% unchanged0.96 agreement

3+ states enact RTR legislation18% unchanged0.96 agreement

Why Confirmation, Not Upgrade

The guidance raise and Q1 beat are meaningful — the $4.0B net income floor that was the central worry is now $500M above the new low end. But the committee separated execution from structural change. PPA (the largest segment at ~50% of equipment revenue) is still declining 5-10%. South America softened to -5%. The cyclical trough appears to be bottoming as projected, but the trough itself is not over. Signals move when the evidence base shifts structurally, not when one quarter tracks ahead of plan.

FTC Right-to-Repair: The Unchanged Variable

Management offered zero commentary on the FTC lawsuit — the single most important variable identified across all five lenses. The FTC settlement market held at 32%, and the state legislation market at 18%. The “Regulatory Cascade” scenario remains at 8-15% probability. A broad FTC remedy could shift COMPETITIVE_POSITION from DEFENSIBLE to CONTESTED, compressing the moat-specific 150-250bps margin premium. This regulatory overhang operates independently of earnings performance and remains the primary source of thesis uncertainty.

Full thesis assessment with all 8 markets, tail risk analysis, and updated monitoring triggers

DE Full Thesis Assessment