- Stock Performance: DE shares fell 5.7% after Q4 results.
- Earnings: Net income declined 14% YoY, missing Zacks Consensus by 0.8%.
- Revenue:
- Equipment operations up 14% YoY, beating estimates by 5.9%
- Gross profit down 2% due to 21% higher cost of sales
- Segment Highlights:
- Production & Precision Ag: +10% YoY
- Small Ag & Turf: +7% YoY
- Construction & Forestry: +27% YoY
- Financial Services: +2% YoY
- Cash Flow: Operating cash flow $7.46B, down from $9.23B last year
- Outlook for FY 2026: Net income expected $4.00–$4.75B, down from $5.03B
Takeaway: Weak demand in the U.S. agricultural sector and rising costs are pressuring DE’s earnings, signaling potential headwinds for ETFs heavily weighted in DE.
DE-Heavy ETFs to Watch
| ETF | Assets | DE Weight | YTD Performance | Fees | Focus |
|---|---|---|---|---|---|
| iShares MSCI Agriculture Producers (VEGI) | $85.7M | 25.5% | +11% | 39 bps | Fertilizers, ag chemicals, farm machinery, packaged foods & meats |
| VanEck Agribusiness ETF (MOO) | $578.8M | 8.15% | +12.8% | 55 bps | Agri-chemicals, animal health, equipment, livestock, aquaculture |
| Strive Natural Resources & Security ETF (FTWO) | $53.2M | 8.32% | +38.7% | 49 bps | Fuel, aerospace, ag, nuclear, gold & precious metals |
| First Trust Indxx Global Agriculture ETF (FTAG) | $6.2M | 10.01% | +12.9% | 70 bps | Companies improving agricultural yields |
| Global X AgTech & Food Innovation ETF (KROP) | $6.3M | 11.84% | +8.2% | 50 bps | AgTech, precision ag, ag robotics, food innovation, biotech |
Investor Considerations
- High DE Exposure Risk: ETFs like VEGI (25.5% DE) could face short-term pressure if DE struggles further.
- Diversification: Broader ETFs like MOO, FTWO, and FTAG have lower DE weightings, offering better risk distribution.
- AgTech & Innovation Theme: KROP focuses on precision agriculture and innovation, less dependent on traditional equipment sales.
- Sector Volatility: Agricultural machinery demand is tied to macro factors (tariffs, commodity prices, weather), which can create volatility in DE-heavy ETFs.