Deere & Company

John Deere is the world’s largest manufacturer of agricultural equipment, and it’s become a lot more interesting than its industrial label suggests.

Deere & Company has 3 revenue drivers generating over $45B annually:

• Agriculture and turf which focuses on delivering premium technology driven equipment to improve farming (tractors).
• Construction and forestry division which focuses proving technology driven machinery for site development, earthmoving, roadbuilding, and timber harvesting.
• Financial Services which provides tailored financial solutions to customers purchasing John Deere equipment.

The moat runs deeper than brand loyalty. Farmers replace equipment every 10-15 years, creating predictable replacement cycles. Meanwhile, competitors like CNH Industrial and AGCO can copy the hardware but struggle to match the precision agriculture software that optimises planting, harvesting, and yield management. Data network effects strengthen with each connected machine.

Climate pressure accelerates adoption of precision farming technology over the next decade. The risk ? Recession hits farmers harder than most. Commodity prices crash, land values drop, equipment purchases get delayed. China trade tensions remain a wildcard for a company generating 20% of revenue internationally.

Financials: Operating margins: 18–20% dwarf most industrials stuck in single digits. Net sales growth +13% in the latest earnings. Total equity rose from $25.95B to $26.3B (2025 to 2026). The balance sheet carries reasonable debt at ~2.5x EBITDA. Return on equity sits around 22%, which is solid for capital intensive manufacturing. Full company financials are available at John Deere investor relations.

The growth story people miss: Deere isn’t just selling tractors. They’re building a precision agriculture software platform, GPS-guided planting, automated soil analysis, fleet management subscriptions. Every machine they sell becomes a recurring revenue node. That’s a different business model to what the stock multiple implies.

SA connection: Deere has a direct presence in South Africa through John Deere Financial SA and an active dealer network serving commercial farming operations across the country. As global food security concerns mount and SA agriculture modernises, Deere’s tech stack becomes increasingly relevant to local large-scale farmers.

The recurring software revenue is underappreciated, and the 22% return on equity is exceptional for heavy manufacturing. The 22x forward earnings is a premium, but it’s one the business is starting to justify.