Mar. 22 at 11:08 AM
$DE Short Setup Brewing
DE is still trading rich at ~30x TTM earnings with EPS near ~17.7 and shares near
$560 despite weakening core ag demand.
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Farmers are under serious margin pressure – high rates, inflated input costs, weak crop economics = big ticket equipment deferred. New & used sales are contracting and inventories aren’t clearing easily.
Management literally called FY26 a cycle trough but that was before geopolitical energy shocks and renewed tariff uncertainty hit global ag margins.
Large‑ag equipment demand remains weak while small ag + construction are propping up results – not the core cash cow.
DE’s valuation doesn’t reflect slowing volumes + looming macro risk. If farmers tighten belts harder, orders could crater faster than consensus expects.
Risk to buyers: premium multiple + cyclical headwinds + macro uncertainty.
Catalyst for shorts: lower equipment orders, margin compression, rates still sticky, crop income weak.
