During the October 2 episode of Mad Money, a caller noted that the price of corn is up about 20% following a couple of down years and asked Jim Cramer for his thoughts on Deere & Company (NYSE:DE), specifically inquiring whether agricultural commodities are bottoming. He replied:
I think Deere is sensational, not just good. I think it’s sensational. They’re not promotional. They don’t come on TV, but it has been an unbelievable company. I first started buying it in the 1987 crash, and it’s been just one of the best performers… Unbelievable machines.
The company made it to our list of Biggest Agriculture Stocks to Buy in 2026, but several other noteworthy agriculture names occupied spots above it.
Order Trends Offer Encouragement
Deere & Company sees signs that the agricultural equipment downturn is approaching its bottom. In its August 20 earnings release, management pointed to early orders, improving used-equipment inventories and greater adoption of advanced technologies as reasons for expecting 2026 to mark the cycle’s low point. UBS analysts had an interesting take regarding the agricultural equipment cycle and its impact on the company, which you can read here. Deere’s farm-equipment business is facing a difficult cycle, but the company has been finding growth in an area investors may not immediately associate with the John Deere name. Take a look at what’s driving that unexpected opportunity.
The company raised its fiscal-year net income forecast to between $4.75 billion and $5 billion. Its other businesses are already contributing to an improvement. Fiscal third-quarter construction and forestry sales increased 18% to $3.62 billion, while segment operating profit rose 84%. Small Agriculture & Turf sales grew 12%. Across Deere, net income increased to $1.38 billion from $1.29 billion a year earlier.
Large Equipment Demand Still Has Ground to Recover
The recovery remains uneven. Deere & Company expects the U.S. and Canadian large agricultural equipment market to decline between 15% and 20% in fiscal 2026. Its own Production & Precision Agriculture sales are projected to fall approximately 10%. Management’s expectation of a bottom therefore should not be confused with a return to broad growth.
The valuation also requires some confidence in the recovery. Valuation data puts Deere at approximately 32.4x forward earnings, compared with 24.5x for CNH Industrial and 18.1x for AGCO. Deere shows a substantial premium to both agricultural equipment peers. Differences in profitability and business mix matter, but investors are already paying considerably more for its expected earnings.
For a cyclical manufacturer, a high forward multiple can partly reflect depressed earnings. That does not automatically make the shares expensive, but it makes the timing and strength of an earnings rebound important. Deere’s premium valuation leaves limited room for disappointment if the agricultural equipment recovery takes longer than expected.
Fund Ownership Slips While Short Interest Remains Modest
According to Insider Monkey’s database, 59 hedge funds held Deere & Company in Q2, compared with 62 in Q1. Bill & Melinda Gates Foundation Trust kept its position unchanged in the company with nearly 3.56 million shares and was the most significant hedge fund holder in Q2. Short interest stood at 2.08% of the public float. Cramer’s comment points to a long-held confidence in Deere. However, it can be said that buyers today are paying a premium for that reputation. Improving orders offer encouragement, but the next stage of the story needs to bring a stronger recovery in the agricultural business.
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