Zacks Industry Outlook Highlights Deere & Company, Kubota, Lindsay and CNH Industrial

For Immediate ReleaseChicago, IL – March 12, 2025 – Today, Zacks Equity Research discusses Deere & Company DE, Kubota KUBTY, Lindsay LNN and CNH Industrial CNH.Industry: Farm EquipmentLink: https://www.zacks.com/commentary/2428005/3-farm-equipment-stocks-to-watch-amid-industry-challengesDespite weak commodity prices hampering the near term outlook of the Zacks Manufacturing - Farm Equipment industry, it will benefit from increased agricultural equipment demand to meet the food requirements of a growing population. Deere & Company, Kubota and Lindsay are well-poised to capitalize on this demand, backed by their efforts to grow their products.Focusing on revolutionizing agriculture with technology to make farming automated, easy to use and more precise across the production process is expected to be another major catalyst. Deere, CNH Industrial and Kubota are, thus, investing heavily in upping their technology game.About the IndustryThe Zacks Manufacturing - Farm Equipment industry comprises companies that manufacture agricultural equipment. These equipment include tractors, combines, cotton pickers and harvesting equipment; tillage, seeding and application equipment, consisting of sprayers, nutrient management and soil preparation machinery; and hay and forage equipment, comprising self-propelled forage harvesters and attachments, balers and mowers.Some companies in the industry produce turf and utility equipment, consisting of riding lawn equipment and walk-behind mowers, golf course equipment, utility vehicles, commercial mowing equipment, and garden tillers and snow throwers. Some participants manufacture irrigation equipment. Deere, CNH Industrial and Kubota are presently the top three global manufacturers of agricultural equipment (in that order).Trends Shaping the Future of the Manufacturing - Farm Equipment IndustryLow Commodity Prices Act as a Woe: The U.S. Department of Agriculture (USDA) forecasts a 29.5% year-over-year increase in net farm income to $180.1 billion for 2025, indicating an increase of 29.5% from that reported in 2024. This projects an improved scenario, considering the 19% and 6% decline in net farm income in 2023 and 2024, respectively. However, the increase in net farm income this year will be mainly due to the $33.1-billion year-over-year increase in direct government farm payments to $42.4 billion. Meanwhile total crop receipts are forecast to decrease 2.3% from the 2024 level due to lower soybeans and corn prices.Demand for Food to Fuel the Industry: Despite the ongoing volatility in commodity prices and lower crop receipts, agricultural equipment demand will continue to be supported by increased global demand for food, stemming from population growth and an increasing proportion of the population aspiring for better living standards. In the United States, the agricultural machinery market is forecast to reach $42.05 billion in 2025 and grow to $57.08 billion in 2030, seeing a compound annual growth rate (CAGR) of 6.3%.With farm sizes increasing, there is a greater need for labor, but escalating labor costs are prompting farmers to turn to mechanization. Additionally, subsidies on agricultural machinery purchases are enabling even small-scale farmers to invest in equipment.Pricing, Cost-Cutting Actions to Boost Margins: The industry has not been immune to the rampant cost inflation prevailing in the sector. Constraints on the availability of raw materials, labor and trucking resources have led to higher lead times for deliveries. However, the industry players have recently been reporting improvements in the supply chain. The companies have been implementing pricing and cost-reduction actions, which are likely to help sustain margins.Technologically Advanced Machinery Gaining Popularity: Customers are increasingly relying on advanced technology, smart farming solutions and mechanization to run their operations. Thus, the industry participants are enhancing investments in launching products equipped with advanced technologies and features to keep up with customers' evolving demands. Precision agriculture technology is expected to be a key catalyst, as it enables farmers to increase yield with reduced input costs and sustainability benefits.Zacks Industry Rank Indicates Dull ProspectsThe Zacks Manufacturing - Farm Equipment industry is part of the broader Zacks Industrial Products sector. The industry currently carries a Zacks Industry Rank #160, which places it at the bottom 35% of 247 Zacks industries.The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dim prospects in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.Despite the bleak near-term prospects of the industry, we will present a few Manufacturing - Farm Equipment stocks that can be retained in one's portfolio. It is worth taking a look at the industry's stock-market performance and valuation picture before that.Industry Outperforms Sector and S&P 500The Zacks Manufacturing - Farm Equipment industry has outperformed its sector and the Zacks S&P 500 composite over the past 12 months. Stocks in this industry have gained 30.1% in the past 12 months compared with the S&P 500's growth of 12.5%. The Industrial Products sector has dipped 1.1% in the said time frame.Industry's Current ValuationOn the basis of the forward EV/EBITDA ratio, which is a commonly used multiple for valuing farm equipment stocks, we see that the industry is currently trading at 51.03X compared with the S&P 500's 13.44X. The Industrial Products sector's forward 12-month EV/EBITDA is 19.97X.Over the last five years, the industry traded as high as 51.74X and as low as 18.60X, the median being 27.49X.3 Manufacturing - Farm Equipment Stocks to Keep an Eye OnLindsay: The company recently acquired a 49.9% minority interest in Pessl Instruments GmbH. This will help accelerate innovations in water management and increase LNN's global reach. Project opportunities in developing international irrigation markets continue to be robust, driven by food security and water scarcity concerns. The $110 billion funding under the Infrastructure Investment and Jobs Act (IIJA) for roads, bridges and other transportation projects is expected to translate into higher demand for Lindsay.The company is also well-poised to gain from demand for its Road Zipper System, which is gaining popularity globally for its faster implementation and lower costs for constructing lanes. Recently, LNN finalized a Road Zipper System contract valued at more than $20 million, which is expected to be delivered in the ongoing quarter.The Zacks Consensus Estimate for the Omaha, NE-based company's fiscal 2025 earnings has moved up 3% over the past 60 days. LNN has a trailing four-quarter earnings surprise of 12.6%, on average. It currently carries a Zacks Rank #2 (Buy).You can see the complete list of today's Zacks #1 Rank stocks here.Kubota: The company has formulated its long-term vision, "GMB2030." It has been progressing with initiatives to realize smart agriculture to provide solutions that will improve the productivity and safety of food. Agricultural machine automation is one of the key pillars of these initiatives. Revenues in the Farm and Industrial machinery are expected to see steady growth in 2025 aided by robust construction equipment sales in North America and sales recovery in Asia, mainly in Thailand and Asia.Europe is one of Kubota's main markets for mini excavators and is expected to grow backed by solid demand for construction work and housing construction in urban areas, including the renewal of aging infrastructure. KUBTY has plans to boost its current production capacity for the European market by approximately 40% by 2028.The Zacks Consensus Estimate for Osaka, Japan-based Kubota's earnings for fiscal 2025 has remained unchanged over the past 60 days at $6.78 per share. The estimate indicates year-over-year growth of 3.8%. The company has a trailing four-quarter earnings surprise of 5.6%, on average. It has an estimated long-term earnings growth rate of 2.2% and currently carries a Zacks Rank #3 (Hold).Deere: The company is witnessing solid growth in order levels, which is expected to aid its top-line performance. DE will continue to benefit from its focus on launching products equipped with advanced technologies and features that provide it with a competitive edge. Efforts to expand in precision agriculture will be a significant growth driver.Replacement demand, triggered by the need to upgrade old equipment, will continue to support its revenues. Considering that Deere also makes construction equipment, it will benefit from strong demand in the residential and non-residential construction markets. DE's cost-control actions have been supporting margins despite the persistent inflationary pressures.The Zacks Consensus Estimate for the Moline, IL-based company has a trailing four-quarter earnings surprise of around 9%, on average. Deere currently has an estimated long-term earnings growth rate of 12% and carries a Zacks Rank of 3.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch/Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comPast performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance  for information about the performance numbers displayed in this press release.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lindsay Corporation (LNN): Free Stock Analysis Report Deere & Company (DE): Free Stock Analysis Report CNH Industrial N.V. (CNH): Free Stock Analysis Report Kubota Corp. (KUBTY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks