Deere & Company (NYSE:DE) has declined by around 1.5%, while CNH Industrial N.V. (NYSE:CNH) has gained slightly by 2% over the last six months. This compared to a rise of over 42% posted by the Insider Monkey Billionaire Index during the period.
The two companies sell many of the same things to the same customers, but they are in very different positions. Deere is the clear leader in agricultural equipment, while CNH is trying to improve its economics during one of the weaker points in the farm-equipment cycle.
That difference matters because the agricultural cycle may finally be close to turning. Deere says its order trends suggest 2026 could be the bottom of the current cycle. Yet farm economics remain difficult, with low commodity prices and high input costs keeping farmers cautious about buying expensive equipment.
There is also a new complication. On October 7, the FTC and USDA opened an inquiry into potential anticompetitive practices in agricultural equipment, including issues around acquiring and maintaining machinery. Deere, CNH, and AGCO shares all fell after the announcement. The inquiry does not accuse these companies of wrongdoing, but it adds another layer of uncertainty to an industry already in a difficult cycle.
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Deere has built something difficult to copy
Deere’s biggest advantage is not that it makes better tractors. The more important development is that the company has been turning agricultural equipment into a technology platform.
Its precision-agriculture systems use data, guidance and automation to help farmers plant, spray and harvest more efficiently. That becomes more valuable as farms get larger and equipment gets more expensive.
There is evidence that Deere’s technology is becoming part of the economics of the machine rather than just an optional add-on. The company continues to invest heavily in new products and technology, while its agricultural business is increasingly tied to precision farming and autonomous capabilities.
But the bigger advantage may be the combination of technology with Deere’s dealer and parts network. A farmer buying a $500,000 machine does not just need the machine. They need financing, maintenance, replacement parts, and support when something goes wrong during a crucial part of the farming season.
That creates a business relationship that is much harder to replicate than simply building a competing tractor.
CNH has a different opportunity
CNH Industrial N.V. does not have Deere’s scale, but that also means it does not need to catch Deere outright for the stock to work.
Its agriculture business generated $3.3 billion in Q2 sales, roughly flat year over year, but adjusted EBIT fell 35% to $170 million. Agriculture margins fell to 5.2% from 8.1%.
The interesting part is what happens when the cycle improves.
CNH is cutting production, reducing dealer inventory, and focusing on costs during what management describes as the trough year for agriculture. If demand recovers, even a modest improvement in volumes could have a much bigger effect on profits because the business is coming from such a depressed margin base.
That makes CNH more of a recovery story. Deere, meanwhile, is trying to combine a cyclical recovery with continued gains from technology and productivity.
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Deere still has to prove the premium
This is where I think the comparison gets difficult.
Deere & Company’s Production and Precision Agriculture sales fell 6% in the third quarter, yet its overall revenue increased 5% because Small Agriculture & Turf and Construction & Forestry were stronger. The company raised its 2026 net income outlook to $4.75 billion-$5 billion and believes the agricultural cycle is close to a bottom.
That sounds encouraging, but investors cannot assume the cycle will turn exactly when Deere expects.
Farmers buy equipment when their economics allow them to, not simply because manufacturers are ready for another upcycle. Low crop prices, interest costs, and tariffs can delay purchases. Deere also expects net tariff costs of about $750 million in 2026 and $1 billion in 2027, according to Reuters.
CNH has even more operational risk. Its agricultural margins are already weak, and its construction business remains barely profitable. Its earlier investment in autonomous farming technology also suffered a significant impairment after commercialization timelines were pushed back.
So Deere has the stronger technology story, but CNH may have more room for improvement if the cycle finally turns.
The Valuation Tells Two Different Stories
Deere trades at 29.33x forward earnings, compared with 15.53x for CNH. That is a substantial premium, but there are reasons for it. Deere has stronger economics, greater scale and a more credible technology advantage. Investors are paying for the expectation that Deere will benefit when farm equipment demand recovers, while continuing to gain from precision agriculture and automation. The question is whether those advantages can support earnings growth beyond a normal cyclical recovery. At nearly 30x forward earnings, Deere needs to show that its technology can contribute to more durable growth and profitability, rather than simply help it perform better than competitors during a difficult period.
CNH is a different story. Its trailing P/E is 55x, despite a forward multiple of just 15.53x. That gap tells us how depressed its earnings have become and how much of a recovery analysts are expecting. Taken at face value, the multiples imply that forward earnings could be roughly 3.5 times the trailing figure, although the exact comparison depends on the earnings periods used. That is a significant recovery assumption, not proof that the stock is cheap.
If farm equipment demand improves and CNH’s margins recover, earnings could rise sharply, making today’s price look much more reasonable. But if margins remain under pressure, the forward P/E will be misleading. Deere costs more because investors have greater confidence in the business. CNH offers more potential upside if the recovery comes through, but it also leaves investors more exposed to the risk that earnings forecasts prove too optimistic.
Conclusion
Deere is the better business. Its combination of equipment, technology, dealers, and aftermarket support gives it advantages that CNH will struggle to reproduce. But that does not automatically make it the better stock.
At 29.33x forward earnings, Deere already carries a large premium to CNH and other peers. It is also a considerable premium given its slowing growth. CNH is less impressive operationally, but its depressed margins leave more room for a cyclical recovery. Deere offers the stronger long-term story. CNH offers the more interesting recovery story.
Market Sentiment
Hedge fund sentiment toward Deere weakened slightly in the second quarter. According to Insider Monkey’s database, 59 hedge funds held Deere in Q2, down from 62 funds in Q1, while the value of their positions increased from $6.00 billion to $6.35 billion.
Hedge fund sentiment toward CNH Industrial weakened in the second quarter. The number of hedge funds holding CNH fell from 39 in Q1 to 34 in Q2, while the value of their positions increased from $606.6 million to $638.7 million.
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This article is originally published at Insider Monkey.
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