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⚠ Receivables Swell at the BottomModerate threat

Deere & Company (DE) — threat to the moat

Deere's dealer receivables rose to 19% of trailing net sales from 16% a year earlier, even if the aged balances are clean.

When sales are slow, the first place strain shows is in what customers owe. Deere's trade accounts and notes receivable, which arise from sales of goods to dealers and other customers, were $7,723 million at 2 August 2026, against $6,103 million a year earlier1, up 26.5%2. As a ratio to the prior twelve months' net sales they were 19%, against 16% a year earlier and 14% at the fiscal year end3.

Deere trade receivables as a share of prior twelve months net sales (%)1627 Jul 2025142 Nov 2025192 Aug 2026Deere Form 10-Q Q3 FY2026, key metrics
Receivables rose faster than sales.

Deere explains the rise as seasonal and as the result of higher sales volumes4, and that is plausible: dealers take spring and summer equipment on interest-free terms, and the balance peaks in the middle of the year. The quality looks good. The share of trade receivables more than twelve months old fell to 1% from 3%5.

The concern is what the receivables imply about the dealers. A dealer who takes more inventory on Deere's terms than it can sell carries the cost until the machines move, and the cost of carrying is partly Deere's, through interest-free periods it compensates its finance arm for. When the cycle turns, these are the balances that become write-offs.

Inventory, by contrast, is under control. Inventories were $7,811 million at 2 August 2026, 26% of the prior twelve months' cost of sales, against 29% a year earlier6. Deere is carrying less stock relative to its business; its dealers, judging by the receivables, are carrying more.

The number to keep an eye on is the ratio itself. If trade receivables rise above 20% of the prior twelve months' net sales at a third-quarter end, Deere will be financing its dealers' stock faster than the dealers are selling it.

References
  1. ReportedDeere's trade accounts and notes receivable, which arise from sales of goods to dealers and other customers, were $7,723 million at 2 August 2026, against $6,103 million a year earlier, up 26.5%.
    Deere & Company Form 10-Q for the quarter ended 2 August 2026, $ millions - balance sheet and key metrics: receivables, inventories, dealer incentives, financing receivables and the Banco John Deere exposure. — Q3 FY2026 · publ. 27 August 2026 · source ↗
  2. Moat Explorer calcDeere's trade accounts and notes receivable, which arise from sales of goods to dealers and other customers, were $7,723 million at 2 August 2026, against $6,103 million a year earlier, up 26.5%.
    Moat Explorer calculation from Deere & Company reported figures ($ millions unless stated; fiscal years end on the Sunday nearest 31 October). Cycle: net income FY2025 over FY2023 5,027 / 10,166 - 1 = -50.6%; net sales and revenues 45,684 / 61,251 - 1 = -25.4%; FY2025 over FY2024 45,684 / 51,716 - 1 = -11.7%; equipment net sales 38,917 / 55,565 - 1 = -30.0%; Production & Precision Ag sales 17,311 / 26,790 - 1 = -35.4%, FY2025 over FY2024 17,311 / 20,834 - 1 = -16.9%; Small Ag & Turf 10,224 / 13,980 - 1 = -26.9%; Construction & Forestry 11,382 / 14,795 - 1 = -23.1%; PPA operating profit 2,671 / 6,996 - 1 = -61.8%; PPA sales 2020-2023 26,790 / 12,962 = 2.07 times, more than double; PPA U.S. net sales and revenues 7,753 / 13,917 - 1 = -44.3%; U.S. net sales and revenues 23,974 / 34,105 - 1 = -29.7%; Latin America 5,607 / 8,197 - 1 = -31.6%; production agriculture product line 16,960 / 26,450 - 1 = -35.9%; roadbuilding 3,552 / 3,794 - 1 = -6.4%; roadbuilding over Construction & Forestry net sales 3,552 / 11,382 = 31.2%. Construction & Forestry product lines FY2023 to FY2025: construction 4,570 / 6,842 - 1 = -33.2%; compact construction 1,922 / 2,451 - 1 = -21.6%; forestry 1,124 / 1,429 - 1 = -21.3%; roadbuilding -6.4%. Segment margins (operating profit over segment net sales): PPA 2020 1,969 / 12,962 = 15.2%; 2021 3,334 / 16,509 = 20.2%; 2022 4,386 / 22,002 = 19.9%; 2023 6,996 / 26,790 = 26.1%; 2024 4,514 / 20,834 = 21.7%; 2025 2,671 / 17,311 = 15.4%. SAT 2020 1,000 / 9,363 = 10.7%; 2021 2,045 / 11,860 = 17.2%; 2022 1,949 / 13,381 = 14.6%; 2023 2,472 / 13,980 = 17.7%; 2024 1,627 / 10,969 = 14.8%; 2025 1,207 / 10,224 = 11.8%. CF 2020 590 / 8,947 = 6.6%; 2021 1,489 / 11,368 = 13.1%; 2022 2,014 / 12,534 = 16.1%; 2023 2,695 / 14,795 = 18.2%; 2024 2,009 / 12,956 = 15.5%; 2025 1,028 / 11,382 = 9.0%. Equipment operations operating profit 2,671 + 1,207 + 1,028 = 4,906 (FY2025), 4,514 + 1,627 + 2,009 = 8,150 (FY2024), 6,996 + 2,472 + 2,695 = 12,163 (FY2023); equipment operating margin 4,906 / 38,917 = 12.6%, 8,150 / 44,759 = 18.2%, 12,163 / 55,565 = 21.9%; first nine months FY2026 (1,372 + 1,538 + 1,134 = 4,044) / 30,779 = 13.1%; Q3 FY2026 527 + 622 + 436 = 1,585 against Q3 FY2025 580 + 485 + 237 = 1,302, an increase of 283. Nine-month operating profit change: PPA 1,372 / 2,066 - 1 = -33.6%; SAT 1,538 / 1,182 - 1 = +30.1%; CF 1,134 / 681 - 1 = +66.5%. PPA share of segment operating profit FY2023 6,996 / 12,958 = 54.0%; FY2025 2,671 / 6,020 = 44.4%. FS segment operating profit 1,114 / 795 - 1 = +40.1%. Equipment gross margin (net sales less consolidated cost of sales): FY2023 55,565 - 37,715 = 17,850, / 55,565 = 32.1%; FY2024 (44,759 - 30,775) / 44,759 = 31.2%; FY2025 38,917 - 28,159 = 10,758, / 38,917 = 27.6%. Equipment share of net sales and revenues 38,917 / 45,684 = 85.2% (FY2025); 55,565 / 61,251 = 90.7% (FY2023). Financial Services band (total net sales and revenues less equipment net sales): 2020 35,540 - (12,962 + 9,363 + 8,947 = 31,272) = 4,268; 2021 44,024 - (16,509 + 11,860 + 11,368 = 39,737) = 4,287; 2022 52,577 - (22,002 + 13,381 + 12,534 = 47,917) = 4,660; 2023 61,251 - 55,565 = 5,686; 2024 51,716 - 44,759 = 6,957; 2025 45,684 - 38,917 = 6,767 = finance and interest income 5,748 + other income 1,019; share of revenue 6,767 / 45,684 = 14.8% (FY2025), 5,686 / 61,251 = 9.3% (FY2023). Financial Services share of consolidated assets 70,021 / 105,996 = 66.1%; share of net income 890 / 5,027 = 17.7%; return on equity 890 / ((7,069 + 7,454) / 2 = 7,262) = 12.3%; Financial Services borrowings 13,382 + 6,595 + 34,788 = 54,765; consolidated borrowings 13,796 + 6,596 + 43,544 = 63,936; FS share 54,765 / 63,936 = 85.7%; Financial Services equity over assets 7,069 / 70,021 = 10.1%, about a tenth (debt to equity 8.6 to 1). Interest compensation to Financial Services 414 / 687 - 1 = -39.7%. Financing receivables 44,575 (about $44.6bn) / 23,702 = 1.88 times. Write-offs six months FY2026 150 / 44,575 = 0.3%. Equipment operations: net debt 9,171 - 6,557 = 2,614 (FY2025); 2,614 / 4,137 = 0.63 years of net income, less than eight months; return on invested capital estimate FY2025 (4,137 + 372 x 0.8 = 4,435) / (18,887 + 9,171 - 6,557 = 21,501) = 20.6%; FY2024 (6,404 + 396 x 0.8 = 6,721) / (15,389 + 7,516 - 5,740 = 17,165) = 39.2%; 20% tax on interest is an approximation. Equipment operations cash flow 5,100 / 11,919 - 1 = -57.2%. Costs and people: R&D over equipment net sales 2,177 / 55,565 = 3.9% (FY2023), 2,290 / 44,759 = 5.1% (FY2024), 2,311 / 38,917 = 5.9% (FY2025), 1,704 / 30,779 = 5.5% (nine months FY2026); nine-month R&D 1,704 / 1,631 - 1 = +4.5%; R&D at the FY2023 ratio 38,917 x 3.9% = about 1,520, difference 2,311 - 1,520 = about 790, about 2 points of 38,917. Employees 82,956 - 73,146 = 9,810, about 9,800, 9,810 / 82,956 = 11.8%. Tariff cost about 600 / 4,906 = 12.2% of equipment operating profit; 1,100 / 4,906 = 22%, about a fifth. Trade receivables 7,723 / 6,103 - 1 = +26.5%. Wirtgen first-year operating profit 116 / 5,327 = 2.2%; CF operating profit 1,028 / 5,327 = 19.3%, about a fifth; CF goodwill 3,051 / 4,188 = 72.9%. Tenna goodwill 286 / 439 = 65%. Backlog CF 3.8 / 2.2 - 1 = +73%. Engaged acres per connected machine 520 million / 1.2 million = about 433. Capital returns: cash returned FY2023 dividends paid 1,427 + repurchases 7,216 = 8,643; FY2025 1,720 + 1,138 = 2,858; 2,858 / 8,643 - 1 = -66.9%; diluted shares 271.7 / 316.6 - 1 = -14.2%; dividend payout 6.48 / 18.50 = 35.0%. Fiscal 2016 net margin 1,523.9 / 26,644.0 = 5.7%. Diluted EPS FY2025 over FY2023 18.50 / 34.63 - 1 = -46.6%. Equipment segment identifiable assets 8,787 + 3,987 + 7,792 = 20,566, over Financial Services 70,021 = 29.4%, less than a third. Valuation: trailing twelve months to 2 August 2026 net sales and revenues 45,684 - 33,290 + 35,589 = 47,983; net income 5,027 - 3,962 + 3,808 = 4,873; diluted EPS 18.50 - 14.57 + 14.06 = 17.99; P/E 185,230 / 4,873 = 38.0; P/S 185,230 / 47,983 = 3.86; market value over FY2023 net income 185,230 / 10,166 = 18.2 times; market value change since FY2025 year end 185,230 / 124,792 - 1 = +48.4%; trailing net income 4,873 / 5,027 - 1 = -3.1%; analyst target 691.83 / 687.00 - 1 = +0.7%; Deere over CNH and AGCO 185.23 / (16.67 + 8.03 = 24.70) = 7.5 times; Deere over Caterpillar 185.23 / 388.62 = 47.7%, about half; Caterpillar over Deere 388.62 / 185.23 = 2.1 times. Year-end P/E and P/S: 2015 24.15bn / 1,940 = 12.45, / 28,863 = 0.837; 2016 32.65 / 1,524 = 21.42, / 26,644 = 1.225; 2017 50.49 / 2,159 = 23.39, / 29,738 = 1.698; 2018 47.52 / 2,368 = 20.07, / 37,358 = 1.272; 2019 54.28 / 3,253 = 16.69, / 39,258 = 1.383; 2020 84.31 / 2,751 = 30.65, / 35,540 = 2.372; 2021 106.137 / 5,963 = 17.80, / 44,024 = 2.411; 2022 119.777 / 7,131 = 16.80, / 52,577 = 2.278; 2023 104.011 / 10,166 = 10.23, / 61,251 = 1.698; 2024 111.610 / 7,100 = 15.72, / 51,716 = 2.158; 2025 124.792 / 5,027 = 24.82, / 45,684 = 2.732. Guidance: fiscal 2026 net income midpoints (4,000 + 4,750) / 2 = 4,375 (November 2025); (4,500 + 5,000) / 2 = 4,750 (February and May 2026); (4,750 + 5,000) / 2 = 4,875, $4.875bn (August 2026); 4,875 / 5,027 - 1 = -3.0%; nine months 3,808 / 4,875 = 78.1%; implied fourth quarter 4,750 - 3,808 = 942 to 5,000 - 3,808 = 1,192. U.S. share of net sales and revenues 23,974 / 45,684 = 52.5% (FY2025), 34,105 / 61,251 = 55.7% (FY2023) - cycle, costs, people, capital returns and geography. — FY2015-Q3 FY2026 · publ. October 2026 · source ↗
    Method: Arithmetic on figures reported in Deere & Company Forms 10-K, 10-Q, results releases, the 2026 proxy statement, the Q3 FY2026 call, and stockanalysis.com market data; each operand is stated in the source line.
  3. ReportedAs a ratio to the prior twelve months' net sales they were 19%, against 16% a year earlier and 14% at the fiscal year end.
    Deere & Company Form 10-Q for the quarter ended 2 August 2026, $ millions - income statement, balance sheet, receivables, financing receivables, cash returned and the outlook. — Q3 FY2026 · publ. 27 August 2026 · source ↗
  4. ReportedDeere explains the rise as seasonal and as the result of higher sales volumes, and that is plausible: dealers take spring and summer equipment on interest-free terms, and the balance peaks in the middle of the year.
    Deere & Company Form 10-Q for the quarter ended 2 August 2026, $ millions - income statement, balance sheet, receivables, financing receivables, cash returned and the outlook. — Q3 FY2026 · publ. 27 August 2026 · source ↗
  5. ReportedThe share of trade receivables more than twelve months old fell to 1% from 3%.
    Deere & Company Form 10-Q for the quarter ended 2 August 2026, $ millions - balance sheet and key metrics: receivables, inventories, dealer incentives, financing receivables and the Banco John Deere exposure. — Q3 FY2026 · publ. 27 August 2026 · source ↗
  6. ReportedInventories were $7,811 million at 2 August 2026, 26% of the prior twelve months' cost of sales, against 29% a year earlier.
    Deere & Company Form 10-Q for the quarter ended 2 August 2026, $ millions - balance sheet and key metrics: receivables, inventories, dealer incentives, financing receivables and the Banco John Deere exposure. — Q3 FY2026 · publ. 27 August 2026 · source ↗
Sources
Generated October 5, 2026