Deere & Company (DE) thinks the worst is over. The iconic green tractor maker reported Thursday that first-quarter 2026 net income came in at $656 million, or $2.42 per share, for the period ended February 1. That's down from $869 million a year earlier, but here's the thing: it handily beat Wall Street's estimate of $2.06 per share.

Revenue tells a better story. Worldwide net sales and revenues jumped 13% to $9.611 billion, crushing the analyst estimate of $7.686 billion. Net sales specifically hit $8.001 billion, up from $6.809 billion in the prior-year quarter. Investors liked what they saw, sending shares up more than 10% to a new 52-week high.

"While the global large agriculture industry continues to experience challenges, we're encouraged by the ongoing recovery in demand within both the construction and small agriculture segments," said John May, chairman and CEO. "These positive developments reinforce our belief that 2026 represents the bottom of the current cycle and provides us with a strong foundation for accelerated growth going forward."

The Tale of Three Segments

Deere's business tells different stories depending on which equipment you're looking at. Production & Precision Agriculture, the big farming equipment segment, saw net sales edge up just 3% to $3.163 billion. But operating profit collapsed to $139 million from $338 million, with margins sliding from 11.0% to 4.4%. The culprits? Higher tariffs, unfavorable product mix, and increased warranty costs.

Meanwhile, Small Agriculture & Turf is having a moment. Sales surged 24% to $2.168 billion, and operating profit climbed to $196 million from $124 million. Margins improved to 9.0% from 7.1%, thanks to higher shipment volumes and better pricing power that more than offset tariff pressures.

Construction & Forestry posted even more impressive numbers, with sales up 34% to $2.670 billion. Operating profit more than doubled to $137 million from $65 million, and margins expanded from 3.3% to 5.1%. Higher shipment volumes and production efficiencies drove the gains, though tariffs remained a headwind here too.

The Financial Services division, often overlooked but reliably profitable, saw net income rise to $244 million from $230 million, helped by favorable financing spreads and fewer credit losses.

Cash Position and Forward Outlook

Deere used $890 million in operating cash during the quarter, an improvement from the $1.132 billion used a year earlier. The company ended the quarter with $6.798 billion in cash and equivalents, balanced against $14.392 billion in short-term borrowings and $41.804 billion in long-term debt.

Management raised its full-year fiscal 2026 net income guidance to a range of $4.5 billion to $5.0 billion. The company expects Production & Precision Agriculture sales to decline 5% to 10%, while both Small Agriculture & Turf and Construction & Forestry are projected to grow about 15%. Financial Services should contribute around $840 million in net income.

"Our sustained investment in research and development throughout the cycle is yielding measurable results as we move toward launching a wide range of innovative products and solutions across all business segments," May said.

Price Action: Deere shares traded up 10.21% at $653.86 at the time of publication Thursday, hitting a new 52-week high.