Why Deere (DE) Stock Is Nosediving

What Happened?

Shares of agricultural and construction machinery company Deere (NYSE:DE) fell 7.9% in the morning session after the company reported second-quarter results that, despite beating revenue expectations, showed a significant year-over-year decline in profitability. While the company's revenue grew 5.5% year-over-year to $12.02 billion, surpassing analyst forecasts, investors focused on the weakening bottom line. Deere's earnings per share fell to $4.75 from $6.29 in the same quarter last year, although this figure did beat Wall Street's estimates. A key area of concern for investors was the company's shrinking profitability. The operating margin, a measure of core business profitability, contracted sharply to 13% from 20.2% a year ago, indicating that expenses grew faster than revenue. This significant decline in operational efficiency and the steep drop in year-over-year earnings appeared to outweigh the positive sales news, prompting a negative reaction from the market.

The shares closed the day at $478.61, down 6.7% from previous close.

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What Is The Market Telling Us

Deere’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 9 months ago when the stock gained 8.5% on the news that the company reported impressive third-quarter results that exceeded analysts' revenue and EPS estimates. Looking ahead, the company initiated fiscal 2025 guidance, calling for revenues down 10-15% year on year. While this may sound like a negative, it does show that end markets are not getting worse and may be reaching a trough. Zooming out, we think this was a good quarter with guidance showing that demand may be hitting a bottom in 2025 and poised for an uptick thereafter, especially if themes like reshoring and industrial automation become more real.

Deere is up 14.5% since the beginning of the year, but at $478.71 per share, it is still trading 9.9% below its 52-week high of $531.48 from May 2025. Investors who bought $1,000 worth of Deere’s shares 5 years ago would now be looking at an investment worth $2,505.

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