Deere & Company reports Q3 results tomorrow morning with options traders notably more defensive than they were 48 hours ago — a shift that has accelerated even as short sellers remain firmly on the sidelines.
The clearest move since Sunday's earnings-preview note is in options. The put/call ratio jumped to 1.05 on Tuesday, up from 1.00 on Monday and 0.999 on Friday — its highest reading in the current run and now 1.72 standard deviations above the 20-day mean of 0.97. That's not yet at the 52-week extreme of 1.28, but the direction is unambiguous: hedging demand picked up sharply on the session immediately before the print. The contrast with the short book is striking. Short interest holds at 2.2% of the free float, essentially flat on the week and down 15% over the past month. Borrow conditions remain completely unstressed: availability is near 1,916%, meaning there are roughly nineteen shares available to lend for every one already borrowed. Cost to borrow nudged up to 0.50% — a tick higher than Monday's 0.498% but still barely above the general collateral rate. The lending market shows no sign of squeeze pressure whatsoever.
The Street's posture is similarly divided. Two analysts trimmed targets in the days leading into the print — JP Morgan's Tami Zakaria cut to $570 from $590 on August 14, and Evercore ISI lowered to $632 from $641 on August 11 — both keeping neutral or in-line ratings. That brings the consensus mean target to roughly $647, implying about 10% upside from Tuesday's close of $588.72. Bulls at DA Davidson and RBC Capital hold targets well above $700, leaning on the Small Agriculture & Turf segment's 24% year-on-year sales growth and a 50% jump in the Construction & Forestry earthmoving order book. Bears focus on equipment operations margin compression — operating margin fell 180 basis points to 5.9% last quarter — and negative operating cash flow from equipment operations of $1.3 billion. The PE multiple has drifted to around 29x, roughly flat over the past month, while EV/EBITDA holds near 27.4x. Neither is stretched enough to be the deciding factor; the print itself is what the Street is waiting on.
The peer group offered no comfort heading into Tuesday's close. CNH fell 2.5% on the day and is down 5.6% on the week. TEX dropped 4.3% Tuesday and OSK shed 4.1%. AGCO, the closest agricultural machinery comparable, fell a milder 1.3% Tuesday but is still down 2.9% on the week. DE itself closed down 1.9% Tuesday to $588.72, extending a 4.7% weekly decline — underperforming AGCO but roughly in line with CNH.
The historical pattern from the last earnings print is worth noting. In May, DE fell 5.6% on the day of results and was still down 3.8% five days later. That outcome followed a period where short interest was also retreating ahead of the report, suggesting the short-side positioning reduction did not translate into a positive reception. Whether this quarter's stronger segment data — particularly the SAT and CF order trends — changes that calculus is precisely the question the Q3 print answers tomorrow at 9 AM Eastern.
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