Deere & Company (DE) shares extended gains Thursday morning after the agricultural machinery maker reported fiscal third-quarter results that topped Wall Street expectations. Revenue rose 5% year over year to $12.61 billion, while earnings per share came in at $5.10, up nearly 7% from the same period last year.
The strong quarter caught the attention of famed investor Jim Cramer, who expressed enthusiasm about Deere's long-term prospects but advised against chasing the stock during Thursday's initial 7% surge. His caution stems from broader market choppiness, which he described as an "ugly" trading day, where sharp single-day spikes often leave buyers vulnerable to pullbacks.
Why Cramer is bullish on Deere
Cramer's optimism is largely tied to management's commentary that the prolonged downturn in agricultural machinery is finally nearing its floor. Deere's leadership reiterated on the earnings call that fiscal 2026 marks the bottom of the agriculture equipment cycle. Cramer noted that Deere's management has historically been conservative and non-promotional, rarely painting a rosy picture without strong justification. After months of highlighting tough farm economy conditions, their willingness to call an ag bottom is seen as a significant inflection point.
Because agricultural cycles operate on extended multi-year horizons, calling the bottom suggests a sustained recovery path ahead, offering long-term value creation for patient investors.
Why not to buy today
Alongside the quarterly beat, Deere raised the lower end of its full-year guidance, now expecting net income of $4.75 billion to $5.00 billion, up from the prior range of $4.50 billion to $5.00 billion. Despite these reassuring forward indicators, Cramer advised against buying the stock during Thursday's spike, pointing to macro volatility and the risk of buying into a short-term rally.
While Cramer remains convinced the cyclical bottom makes Deere shares a compelling long-term buy, he believes patient investors will likely find better tactical entry points once the initial earnings momentum cools.
How to play Deere after Q3
The broader machinery landscape is showing underlying signs of stabilization after prolonged cyclical pressure. Deere's order book trends, stabilizing used-equipment inventory levels, and growing adoption of high-margin precision technology are serving as structural tailwinds. Strength in both Construction & Forestry and Small Agriculture & Turf helped offset localized weakness in Production & Precision Agriculture this quarter.
As interest rate pressures ease and global grain markets normalize, machinery replacement demand is poised to reaccelerate. Investors looking to build a position in industrial blue chips should keep DE stock on their radar, waiting for short-term market volatility to offer a more attractive entry point to capture the coming ag upcycle.
Wall Street currently rates Deere at Overweight on average, with price targets as high as $812, indicating significant upside potential from current levels. For context, Nvidia's recent earnings preview and Walmart's valuation concerns highlight the broader market's focus on earnings quality and valuation.
This article is for informational purposes only and does not constitute financial advice.
