DE

Deere is deep in an agricultural-equipment downcycle, and the filing makes the depth unambiguous. Equipment-operations net sales fell three straight years — $55,565M (FY23) to $44,759M (FY24) to $38,917M (FY25) — and equipment-operations pretax income nearly halved over the same span, from $12,217M to $5,145M. That flows through to the consolidated numbers: FY25 revenue of $45.7B (-11.7% YoY), net income of $5.03B (-29.2%), diluted EPS of $18.50 (-27.8%), and operating cash flow of $7.46B (-19.2%). The five-year history frames it cleanly — earnings peaked at $10.2B in FY23 and have stepped down since, and nothing in the MD&A signals the trough is in. Management's own caution shows: buybacks were cut 71.6% to $1.14B, conserving cash through the downturn even as the dividend rose 7.2%.

What keeps this from being a sell is franchise quality that holds up at the bottom of the cycle. Even on depressed volumes, net margin is 11.0%, operating margin 19.8%, and ROE 19.4% — through-cycle returns most industrials can't match at a peak. The captive Financial Services arm is a genuine stabilizer: its pretax income actually climbed against the equipment downturn ($802M→$898M→$1,112M over three years), cushioning consolidated earnings and supporting the dividend. Crucially, R&D was held flat at $2,311M despite the revenue decline — Deere is funding precision-ag and autonomy through the trough, protecting the moat and pricing power into the next upcycle. Equity grew 13.6% to $25.9B and retained earnings rose to $59.7B, so the balance sheet is strengthening, not stressing. The 3.08x liabilities/equity looks heavy but is largely Financial Services funding $44.6B of net financing receivables, not equipment-operations distress.