QS Research · Michael Burry's Scion Capital analyst template · 2006
DEERE & CO (DE)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction medium · base case -4% · downside -25% · upside +8%
The market is paying for a cycle turn before it has arrived: at $671.65 Deere is 37.2x TTM net income of $4.87B and about 28.5x the FY2020-FY2025 normalized $6.36B, so even the normalized base leaves little upside. On section 13's normalized base, 27.4x earnings gives about $646/share (-3.8%); 21.4x gives about $505 (-24.8%) and 30.9x gives about $729 (+8.5%). The business is not broken - TTM FCF of $6.02B covers dividends plus buybacks about 2.5x and net debt is only about $8.52B - but the risk/reward is poor and core large-ag PPA earnings are still falling. I pass; I would get interested closer to the downside value or after evidence that large-ag earnings have actually bottomed.
Key numbers
- Share price: $671.65
- Market cap: $181.09B
- Latest financial period: TTM to Aug 2, 2026
- Revenue (TTM): $47.98B
- EV / EBITDA (TTM): 16.2x
- P/E (TTM): 37.2x
- Price / book: 6.47x
The 15 boxes
- ✓ 1. Long-form business notes
Deere is a four-segment equipment and captive-finance company (PPA, SAT, CF, Financial Services in the FY2025 10-K; three segments in FY2020), selling through independent dealer networks with Financial Services carrying retail notes, leases, wholesale receivables and warranties. The cycle is far advanced: revenue ran $61.25B (FY2023) → $51.72B (FY2024) → $45.68B (FY2025) and net income $10.17B → $7.10B → $5.03B, yet operating cash flow of $7.46B in FY2025 still covered $1.36B of capex almost three times over. The oldest report's trough (FY2020) is the normalization anchor: $2.751B net income after $458M after-tax impairment/separation charges, with equipment operations still earning $3.559B operating profit.
- ✓ 2. Competitive advantage
Deere has identifiable durable advantages—brand recognition, a ~2,050-location U.S./Canada dealer network, proprietary parts and aftersales service, precision-tech/connected-machine integration, and a large IP portfolio—but the FY2025 10-K describes crowded global competition and non-traditional entrants. The cycle data show dollar earnings are cyclical: revenue fell from $61.25B FY2023 to $51.72B FY2024 and $45.68B FY2025, while operating income fell from $12.96B FY2023 to $9.04B FY2024; operating cash flow stayed positive at $9.23B FY2024 and $7.46B FY2025. The sources do not provide margin or return ratios, so the durability case cannot be quantified on margins/ROIC from this packet.
- ✓ 3. 10-Q takeaways
Q3 FY2026 sales rose 5% to $12,608M and net income rose 7% to $1,379M, while first nine months FY2026 sales rose 7% but net income fell 4% to $3,808M, with prior-period special tax items distorting the comparison. PPA remained the drag, with Q3 FY2026 sales down 6% and first nine months operating profit down 34%, while SAT and CF grew strongly. FY2026 outlook calls for overall net sales up versus FY2025, PPA down, SAT and CF up; inventory was $7,811M and cash plus marketable securities $10,278M at August 2, 2026.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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