Deere & Company DE and CNH Industrial N.V. CNH are two leading global players in agricultural machinery, with Deere holding the top spot. In addition to their strong agricultural portfolios, both companies also have significant footprints in the construction equipment market.
Both DE and CNH stocks offer investors exposure to long-term megatrends such as precision farming, automation and infrastructure development. However, with the ongoing weakness in both the agricultural and construction markets, as well as tariff concerns, the question is which stock you should put your hard-earned money on.
To find out, let us dive into the fundamentals, growth prospects and challenges for both Deere and CNH Industrial to help identify the better pick for your portfolio.
Deere, known for its iconic green tractors, has a market capitalization of $139 billion. It specializes in agricultural, forestry and turf equipment, and has a strong presence in precision farming technology and construction equipment.
However, DE has faced headwinds, with revenues declining for seven consecutive quarters and earnings slipping in the last six, due to lower volumes in both the agriculture and construction businesses. Weak farmer sentiment, subdued by soft commodity prices, high input costs and elevated interest rates, has dampened demand for agricultural machinery. Trade uncertainty and high interest rates curtailed order activity for both construction and compact construction equipment.
Deere anticipates a challenging industry outlook to persist in fiscal 2025, particularly in the large agriculture equipment market in the United States and Canada, which is expected to decline 30%. The small agriculture and turf equipment market in the United States and Canada is projected to decline 10-15%. European agricultural markets are expected to decline approximately 5%, while South American agricultural markets are forecast to remain flat. The Asia market is expected to be down slightly.
Construction equipment demand is similarly under pressure. Deere expects a 10% drop in U.S. and Canadian construction equipment sales, with compact equipment down 5%. While infrastructure spending remains a tailwind, trade uncertainty and high interest rates are pressuring order activity for both construction and compact construction equipment. Global forestry equipment is forecast to be flat to down 5%, while the global roadbuilding market is expected to remain flat.
Over the long term, Deere is well-positioned for growth, underpinned by consistent investments in innovation and geographic expansion. The company remains focused on revolutionizing agriculture with technology in an effort to make farming automated, easy to use and more precise across the production process. Focus on launching products with advanced technologies and features provides it a competitive edge. The company just launched its large-size H Series forestry machines, designed to elevate productivity and fuel efficiency. These machines integrate enhanced hydraulic systems, an industry first.
