Deere’s Mixed Performance: Analyzing Market Challenges Ahead

Deere (NYSE: DE) has gained 10% this year, contrasting with a 2% drop in the broader S&P 500 index. This strong performance raises questions—specifically, can the company continue to thrive amid an uncertain economic landscape? Currently, Deere is experiencing a cyclical downturn, but many investors believe a recovery may be on the horizon.

Imagine this scenario: what would be your reaction if Deere’s Stock fell by 30% in the next two months? Or worse, what if it dropped by 50-70%? These aren’t hypothetical situations—they occurred during the 2008/2009 financial crisis and in the 2020 COVID-19 pandemic.

Rising macroeconomic uncertainties are casting shadows over the market. Tariffs from the Trump administration could lead to increased prices by removing cheaper goods from the market. Consequently, these factors risk pushing the U.S. economy towards instability or even recession, as further detailed in our macroeconomic analysis. The ongoing geopolitical challenges, particularly the Russia-Ukraine conflict and evolving U.S. stance with implications such as a pending mineral deal, add additional complexity to the situation.

You might ask, “What does this mean for Deere?” Here’s why it matters:

Although Deere has faced recent challenges from decreasing agricultural income, experts expect conditions to improve this year, largely due to federal support. Still, higher interest rates will make financing equipment more costly for farmers. If inflation surges again, will the Federal Reserve respond with aggressive rate cuts? Our stance is skeptical. Anticipated farm income growth may not be sufficient against the backdrop of macroeconomic risks and rising interest rates.

Additionally, while China’s tariffs on agricultural equipment imports might not significantly affect Deere due to its limited exposure in that market, U.S. metal tariffs will certainly raise production costs. This, in turn, could dampen demand from farmers. Recently, China imposed tariffs on various farm products, likely increasing costs and contracting markets for American agricultural goods. Given these challenges, the willingness of farmers to invest in new equipment is uncertain, despite a recent decline in input costs.

Historically, Deere has created considerable wealth for its long-term investors. Nevertheless, it’s vital for stakeholders to recognize the company’s sensitivity to economic downturns. In 2020, Deere’s Stock dropped by over 35% in just weeks. This prompts a critical question: Could Deere’s current share price of $480 fall below $350 if similar market strains resurface? For investors seeking growth with less volatility, the High-Quality portfolio offers a compelling alternative; it has outperformed the S&P 500, yielding returns over 91% since its inception.

Evaluating DE Stock Resilience During Economic Downturns

DE Stock has historically underperformed compared to the S&P 500 index during previous downturns. Concerned about how another market crash might affect DE Stock? Our dashboard, How Low Can Stocks Go During A Market Crash, provides insights into how key stocks performed during the last six significant sell-offs.

Inflation Shock (2022)

• DE Stock dropped 33% from a high of $420 on April 18, 2022, to $280 by July 6, 2022, compared to a 25.4% decline in the S&P 500.
• The Stock fully recovered to its pre-Crisis peak by November 23, 2022.
• Since then, it reached a high of $509.27 on February 19, 2025, and is currently trading near $480.

COVID-19 Pandemic (2020)

• DE Stock fell 37.4% from a high of $177.43 on February 23, 2020, to $111.15 on March 23, 2020, against a 33.9% drop in the S&P 500.
• The Stock fully recovered to its pre-Crisis peak by July 29, 2020.

Global Financial Crisis (2008)

• DE Stock plummeted 73.8% from $94.69 on January 14, 2008, to $24.83 on March 2, 2009, compared to a 56.8% decline in the S&P 500.
• The Stock fully recovered to its pre-Crisis peak by February 11, 2011.

Assessing Premium Valuation Amid Slow Growth

Deere’s Stock is not trading at a low valuation due to a downturn. Instead, it faces challenges as it currently trades at premium multiples of nearly 3.3x last year’s sales and about 19x last year’s earnings, exceeding its four-year averages of 2.5x sales and 16x earnings. This is compounded by slowing growth forecasts, with consensus predicting a revenue decline of 15% and an earnings drop of 25% in 2025.

Given the deceleration and broader economic uncertainties, ask yourself this: Do you want to hold onto your Deere Stock if it starts dropping to $350 or even lower? It’s never easy to cling to a falling Stock. Trefis collaborates with Empirical Asset Management—a Boston-based wealth manager—whose strategies yielded positive returns during the 2008-09 period when the S&P lost over 40%. Empirical has incorporated the Trefis HQ Portfolio into its asset allocation framework, aiming for better returns with reduced risks compared to the benchmark index.

Returns	Mar 2025 MTD [1]	2025 YTD [1]	2017-25 Total [2]
DE Return	-3%	10%	414%
S&P 500 Return	-4%	-2%	156%
Trefis Reinforced Value Portfolio	-2%	-4%	659%

[1] Returns as of 3/7/2025
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.