5 Farm Equipment Stocks to Watch as Industry Shows Promise

About the Industry

The 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, Kubota and CNH Industrial are presently the top three global manufacturers of agricultural equipment (in that order).

Trends Shaping the Future of the Manufacturing - Farm Equipment Industry

Farm Pressures Weigh on Demand, Future Growth Intact: The farm equipment industry continues to face challenging demand conditions as farmers navigate lower commodity prices, elevated input costs and uncertainty surrounding global trade policies. The U.S. Department of Agriculture (USDA) forecasts a slight 0.7% year-over-year dip in net farm income to $153.4 billion for 2026. Total crop receipts are forecast to inch up 1.2% on higher receipts for corn and hay, offset by declines in wheat and rice receipts. Direct government farm payments are expected to increase sharply to $44.3 billion, up $13.8 billion from 2025, driven by higher commodity-related payments and supplemental disaster assistance for farmers and ranchers. However, production expenses are expected to rise 1% to $477.7 billion in 2026. Lower farm profitability could pressure farmers’ purchasing power and lead to delayed equipment purchases, creating near-term headwinds for manufacturers. However, long-term demand prospects remain supported by rising global food consumption, population growth and increasing farm sizes. Labor shortages and rising wage costs are also encouraging farmers to adopt mechanization and invest in equipment that improves productivity and operational efficiency.

Pricing, Cost-Cutting Actions to Boost Margins: Farm equipment manufacturers continue to face margin pressures from elevated labor, freight, fuel and raw material costs, along with ongoing supply-chain challenges. Changes in U.S. trade policies and retaliatory measures from other countries have increased costs for imported components and created additional uncertainty across the agriculture and construction equipment markets. Geopolitical developments, including disruptions related to the Iran conflict, have further strained supply chains and added to cost inflation. To counter these pressures, industry participants are implementing pricing strategies, optimizing sourcing networks, improving manufacturing efficiency and pursuing cost-reduction initiatives. These actions, along with better supply-chain management and operational discipline, are expected to support profitability despite a challenging cost environment.

Technologically Advanced Machinery Continues to Gain Popularity: Manufacturers are investing in technologically advanced machinery equipped with connectivity, autonomous capabilities and data-driven tools to address evolving customer needs. Precision agriculture solutions enable farmers to optimize input usage, improve yields and enhance sustainability while lowering overall costs. As labor availability remains a challenge and the need for higher agricultural productivity increases, demand for smart farming technologies and automated equipment is expected to remain a key growth driver for the industry.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Manufacturing - Farm Equipment industry is part of the broader Zacks Industrial Products sector. The industry currently carries a Zacks Industry Rank #33, which places it in the top 13% of 245 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright prospects for the near term. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock market performance and valuation.

 

Industry Underperforms Sector and S&P 500

The Zacks Manufacturing - Farm Equipment industry has underperformed its sector and the Zacks S&P 500 composite over the past 12 months. Stocks in this industry have gained 10.9% in the past 12 months compared with the S&P 500’s growth of 21.1%. The Industrial Products sector has gained 17.4% in the said time frame.

One-Year Price Performance

Industry's Current Valuation

On the basis of the trailing EV/EBITDA ratio, which is a commonly used multiple for valuing farm equipment stocks, we see that the industry is currently trading at 25.68X compared with the S&P 500’s 17.28X. The Industrial Products sector’s trailing 12-month EV/EBITDA is 20.20X. This is shown in the charts below.

Enterprise Value/EBITDA (EV/EBITDA) Ratio (TTM)

Enterprise Value/EBITDA (EV/EBITDA) Ratio (TTM)

Over the last five years, the industry traded as high as 32.81X and as low as 14.16X, the median being 20.02X.

 

5 Manufacturing - Farm Equipment Stocks to Keep an Eye on

Kubota: The company recently reported an 18% increase in revenues for the Farm & Industrial Machinery segment for the six-month period ended June 30, 2026. Domestic revenues rose 13%, driven by higher farm equipment and engine sales, while overseas revenues increased 19%. North America's construction equipment market remained strong on infrastructure spending and private construction demand, though residential tractor demand softened. India continued to deliver solid growth on supportive government policies and favorable farm conditions, while Thailand remained weak. Management expects segment revenues to grow in 2026, supported by robust North American construction equipment demand, recovery in Europe and Thailand, and continued strength in India. Disciplined fixed-cost management and profitability improvement measures are expected to support profitability.  Agricultural machine automation is one of the key pillars of these initiatives. The company is expanding its product lineup, adding a variety of attachments to meet customer needs. 

The Zacks Consensus Estimate for Osaka, Japan-based Kubota’s earnings for fiscal 2026 has moved up 15% over the past 60 days and is pegged at $5.64. The estimate suggests year-over-year growth of 3.1%. The company has a trailing four-quarter earnings surprise of 22.2%, on average. It has an estimated long-term earnings growth rate of 7.5% and currently sports a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Price & Consensus: KUBTY

Alamo: Supported by robust operating cash flows and solid liquidity, the company has been steadily investing in organic growth initiatives and strategic acquisitions. Its acquisition strategy focuses on profitable businesses with innovative, market-leading product portfolios that serve stable and steadily growing end markets. In line with this approach, it acquired Petersen Industries, a manufacturer of specialized truck-mounted grapple loader equipment for municipal and industrial customers in January 2026. The Industrial Equipment Division delivered a strong quarter, with sales growth and solid profitability, including a meaningful contribution from Petersen. Vegetation Management’s sales were relatively stable compared with the prior year despite pressure in certain end markets. ALG continues to focus on improving margins through operational execution, cost discipline and targeted actions across the portfolio. Also, the company recently renewed its credit facility on improved terms across the facility, further strengthening its liquidity profile and financial flexibility. 

The Zacks Consensus Estimate for the Seguin, TX-based company’s fiscal 2026 earnings has moved up 0.4% in 60 days and implies year-over-year growth of 13.7%. ALG currently carries a Zacks Rank #2 (Buy) and has a long-term estimated earnings growth rate of 16%.

Price & Consensus: ALG

Deere: The company will continue to benefit from its strong focus on launching technologically advanced products and feature-rich solutions that strengthen its competitive positioning. Expansion in precision agriculture remains a key growth catalyst, while replacement demand driven by the need to upgrade aging equipment should continue to support revenues. Deere’s exposure to the construction equipment market also positions it well to benefit from infrastructure spending, healthy rental activity and robust demand from projects such as data centers. Optimizing its cost structure through efficiency initiatives and footprint adjustments, while leveraging pricing actions and its Smart Industrial strategy to offset input cost pressures over time, is also a smart move. Deere acquired construction technology company Tenna, adding mixed-fleet operations and asset tracking capabilities that can integrate with its broader digital ecosystem. The company’s earlier purchase of intellectual property for tree planting equipment from Risutec also supports its precision forestry portfolio and aligns with longer-term sustainability and automation priorities.

The Zacks Consensus Estimate for the Moline, IL-based company’s fiscal 2026 earnings has moved up 0.3% over the past 60 days and is pegged at $18.26. DE has a trailing four-quarter earnings surprise of 10.21%, on average. The company currently has an estimated long-term earnings growth rate of 12.97% and carries a Zacks Rank #3 (Hold).

Price & Consensus: DE

CNH Industrial: The company delivered year-over-year revenue growth in the second quarter of 2026 while advancing its strategic priorities, including quality, sourcing, operational efficiency and dealer network consolidation. Although farmer economics remain under pressure, the company highlighted encouraging equipment-cycle trends, such as normalized dealer inventories, aging fleet and a healthier balance between new and used equipment pricing. CNH continues to support its dealers and customers while investing in equipment and technology to strengthen its competitive position through the next cycle. It is expanding its Precision Technology portfolio through investments in automation, autonomy, digital tools, alternative fuels and electrification. The company is also enhancing its FieldOps platform and integrating Raven technology into newer machines for seamless connectivity. New product launches, feature upgrades and portfolio enhancements, along with ongoing operational efficiency initiatives, are expected to aid growth.

The Zacks Consensus Estimate for CNH Industrial’s fiscal 2026 earnings has remained unchanged over the past 60 days at 41 cents per share.  CNH has a trailing four-quarter earnings surprise of around 10%, on average. The Basildon, UK-based company currently has an estimated long-term earnings growth rate of 12.6% and carries a Zacks Rank of 3.

Price & Consensus: CNH

AGCO: Amid mixed market conditions, AGCO is aligning production with retail demand, managing dealer inventories and maintaining strict cost and working capital discipline. At the same time, it is focused on expanding market share in key regions, particularly in North America's high-horsepower segment, advancing precision agriculture and improving operational quality and efficiency. The company is also investing in fuel-saving technologies that help reduce farmers' operating costs without compromising performance, reliability or uptime. Independent DLG PowerMix testing has validated these efficiency gains across AGCO's Fendt, Massey Ferguson and Valtra brands, supported by AGCO Power's advanced engine and powertrain solutions.

AGCO has an estimated long-term earnings growth rate of 21.7%. The consensus estimate for AGCO’s 2026 earnings has moved up 4% in the past 60 days. The estimate suggests year-over-year growth of 17.4%. It has a trailing four-quarter earnings surprise of 32.7%, on average. This Duluth, GA-based company currently carries a Zacks Rank of 3.

Price & Consensus: AGCO

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This article originally published on Zacks Investment Research (zacks.com).

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