The Rising Influence of Rising Affluence

[DewDiligence]

DE lowers FY2025 guidance_on tariff headwind—stock cruises_to all-time:

https://s22.q4cdn.com/253594569/files/doc_financials/2025/q2/DE-2Q25-News-Release.pdf

DE expects the tariff headwind during FY2025 (ending 10/31/25) of $500M, of which $100M was realized in FY2Q25.

Consequently, DE lowered FY2025 net-income guidance to $4.75-5.5B from the prior range of $5.0-5.5B. Based on 270M diluted shares, the new guidance equates to a GAAP EPS range of $17.60-20.40 (down from $25.62 in FY2024 and $34.63 in FY2023). The unusually wide guidance range is due to continuing uncertainty about tariff implementation.

DE expects FY2025 selling prices to increase ~1% YoY, which is not enough to cover the tariff hit.

So, why is the stock trading at, or near, an all-time high? Because DE has become more tech-oriented and less cyclical compared to years past, and investors fully expect DE to weather the tariff maelstrom and perhaps gain some market share as a result.

Moreover, the tariff per se is not so bad because a high proportion of DE’s US equipment sales are manufactured in the US: 79% of finished products, and 76% of components.

FY2Q25 CC slides:
https://s22.q4cdn.com/253594569/files/doc_financials/2025/q2/DE-2Q25-Earnings-Call-Slides_Final.pdf