John Deere released its fiscal third-quarter earnings report Thursday, beating on the top and bottom lines but posting significant year-over-year decreases in net income and sales.

Kristen Owen of Oppenheimer provided her perspective on Deere's recent earnings and forward guidance. She noted that Deere is taking a cautiously optimistic approach, with strong order books for the next several months providing some visibility into the upcoming quarter. However, uncertainty remains regarding demand in 2026, especially given less favorable commodity conditions and ongoing trade uncertainties.

Owen highlighted some surprises from Deere's report, including negative pricing in the large agriculture segment to address excess inventory in North America. She also discussed the role of innovation, such as advanced technologies that help farmers reduce input costs and maintain yields, which is contributing to Deere's pricing power. However, she cautioned that incremental costs related to tariffs could impact future pricing strategies.

Oppenheimer's Kristen Owen gives her read on Deere post-earnings

Kristen, thanks for the time today. We appreciate it. We had a discussion this morning about how much to believe, given that Deere is such a classic and historic under-guider when it comes to forward guidance. Yeah, thanks, Carl, for having me. You know, Deere's taking an appropriately, cautiously optimistic outlook. Certainly for the fourth quarter, we've got some pretty good visibility. Deere talked about their order books being full for the next four to five months. That's allowing some visibility into the fourth quarter. But really, a lot of the uncertainty is, what does 26 look like? What does 2026 demand look like now that we're in this environment where the commodities backdrop isn't nearly as favorable as it was six months ago? You have an awful lot of trade uncertainty, which we've discussed. And at the same time, a little bit of green shoots in other parts of the world. Deere mentioned on their call this morning, they're seeing a little bit of incremental demand in Europe. They're seeing South America start to percolate. That's been a market that's been really challenged for the last two years. So a really balanced approach here. A couple surprises that we heard, though, things like negative pricing in their large ag business to move some of the excess inventory that is sitting on lots in North America. I think that came as a surprise to folks. Also, some of the early order program commentary. It was a little bit negative, somewhat anticipated. We think positioning into the quarter was short, so that was somewhat anticipated. But the negative price was more of a surprise here. What is, I'm curious, having, I used to cover farm equipment back in the day, is innovation moving along rapidly? And does that afford them some pricing power in the years to come? Sure. I mean, Carl, innovation is something that is so much on display this year. When you look at the yields that farmers will get in North America, USDA said on Tuesday they're expecting 188 bushels per acre of corn. You can attribute that to good weather, but you can also attribute that to the technology that is being used in this industry. So see and spray is certainly one of those that is helping farmers to lower their input costs while protecting yields. That is something that farmers have demonstrated they're willing to pay for, and that is driving some pricing power for deer. I think we have to offset that with a little bit of conservatism around how do you price for some of the incremental costs related to tariffs. Right. And I think viewers understand what some of those inputs might be, given the tariffs that have already been announced. Interesting price action. We'll watch it obviously in the weeks to come. Kristen, thanks for the help today. Good to talk to you.

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Breakdown