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Caterpillar (CAT)
NYSE:CAT
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Caterpillar (CAT) AI Stock Analysis

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CAT

Caterpillar

(NYSE:CAT)

Rating:70Outperform
Price Target:
$438.00
â–²(1.85%Upside)
Caterpillar's overall stock score reflects strong financial performance and shareholder returns, tempered by technical analysis concerns and mixed earnings call sentiment. The company's resilience and strategic focus on backlog growth are positives, but recent sales declines and tariff impacts pose risks.
Positive Factors
Earnings Potential
The market is putting high earnings multiples on GE Vernova's EPS, and there is a 30% upside to CAT shares using a 17 PE.
Infrastructure and Reshoring
CAT remains a Top Pick for 2025 as it plays on global infrastructure and reshoring trends.
Structural Growth
Caterpillar is well positioned to capture structural growth in energy demand, benefiting from trends in data centers, distributed power, and natural gas.
Negative Factors
Construction OEM Challenges
Analysts remain cautious on Construction OEM's heading into the 2H of the year, indicating potential challenges ahead.
Dealer Inventories
Some investors remain concerned that increases in dealer inventories could be a significant headwind into 2025.
Earnings Revisions Risk
There is a very real risk that the expected meaningful 2H25 improvement could lead to negative earnings revisions.

Caterpillar (CAT) vs. SPDR S&P 500 ETF (SPY)

Caterpillar Business Overview & Revenue Model

Company DescriptionCaterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, and industrial gas turbines worldwide. Its Construction Industries segment offers asphalt pavers, backhoe loaders, compactors, cold planers, compact track and multi-terrain loaders, excavators, motorgraders, pipelayers, road reclaimers, site prep tractors, skid steer loaders, telehandlers, and utility vehicles; mini, small, medium, and large excavators; compact, small, and medium wheel loaders; track-type tractors and loaders; and wheel excavators. The Resource Industries segment provides electric rope shovels, draglines, hydraulic shovels, rotary drills, hard rock vehicles, track-type tractors, mining trucks, longwall miners, wheel loaders, off-highway trucks, articulated trucks, wheel tractor scrapers, wheel dozers, fleet management, landfill compactors, soil compactors, machinery components, autonomous ready vehicles and solutions, select work tools, and safety services and mining performance solutions. The Energy & Transportation segment offers reciprocating engines, generator sets, integrated systems and solutions, turbines and turbine-related services, remanufactured reciprocating engines and components, centrifugal gas compressors, diesel-electric locomotives and components, and other rail-related products and services for marine, oil and gas, industrial, and electric power generation sectors. The company's Financial Products segment provides operating and finance leases, installment sale contracts, working capital loans, and wholesale financing plans; and insurance and risk management products for vehicles, power generation facilities, and marine vessels. The All Other operating segment manufactures filters and fluids, undercarriage, ground engaging tools, etc. The company was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. The company was founded in 1925 and is headquartered in Deerfield, Illinois.
How the Company Makes MoneyCaterpillar Inc. generates revenue through the sale of machinery and equipment, which includes construction and mining equipment, engines, and locomotives. The company also earns income from providing financing and insurance services through its Financial Products segment, which supports customer purchases of Caterpillar products. Additionally, Caterpillar offers parts and services to maintain and optimize the performance of its machinery, contributing to a steady stream of aftermarket revenue. Strategic partnerships and a global dealer network enhance its market reach and customer support, further boosting sales and customer loyalty.

Caterpillar Key Performance Indicators (KPIs)

Any
Any
Revenue Geography
Revenue Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Chart InsightsCaterpillar's revenue from North America and Europe, Africa, and Middle East has been declining since late 2023, reflecting broader sales challenges. Despite a robust backlog and strong Energy & Transportation performance, the company faces headwinds from tariffs and economic uncertainty, impacting overall sales. The earnings call highlights a strategic focus on shareholder returns and operational resilience, but ongoing currency impacts and flat machine sales in Construction Industries suggest potential risks to future growth.
Data provided by:Main Street Data

Caterpillar Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q1-2025)
|
% Change Since: 40.41%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
The earnings call presents a mixed picture with significant achievements like record backlog growth and strong performance in Energy & Transportation, balanced by challenges such as a decline in overall sales and revenue, currency impacts, and uncertainties due to tariffs. The company's strategic focus on shareholder returns and operational resilience provides a positive outlook despite these challenges.
Q1-2025 Updates
Positive Updates
Record Organic Backlog Growth
Backlog growth of $5 billion, an all-time record for organic backlog growth in a quarter, driven by strong order rates in all three primary segments.
Strong Performance in Energy & Transportation
Sales to users in Energy & Transportation increased by 13%, with power generation sales growing significantly by 58% due to demand for reciprocating engines for data center applications.
Significant Shareholder Returns
Deployed over $4 billion to shareholders through share repurchases and dividends during the quarter.
Healthy Financial Products Performance
Retail credit applications increased by 13%, and retail new business volume grew by 8% versus the prior year.
Negative Updates
10% Decline in Sales and Revenues
Sales and revenues were down 10% versus last year, primarily due to lower sales volume and unfavorable price realization.
Unfavorable Currency and Price Realization Impacts
The quarter experienced unfavorable currency impacts and price realization, affecting sales across segments, particularly Construction Industries.
Tariff and Economic Uncertainty
The potential impact of tariffs estimated to be a cost headwind of about $250 million to $350 million for the second quarter, with ongoing economic uncertainty.
Decreased Operating Profit and Margin
Operating profit decreased by 27% to $2.6 billion, with adjusted operating profit margin at 18.3%, a 390 basis point decrease versus the prior year.
Company Guidance
During the Caterpillar Q1 2025 earnings call, the company reported a 10% decline in sales and revenues compared to the previous year, amounting to $14.2 billion. Despite the decline, the firm achieved an adjusted operating profit margin of 18.3%, surpassing expectations due to favorable manufacturing costs. Adjusted profit per share was $4.25, with a substantial backlog growth of $5 billion, marking a record in organic backlog growth. The Energy & Transportation segment saw a sales increase of 13% driven by power generation, while machine sales to users in Construction Industries were flat, and those in Resource Industries declined by 10%. ME&T free cash flow was $200 million, with $4.3 billion returned to shareholders through share repurchases and dividends. The call highlighted ongoing tariff impacts, with an estimated Q2 cost headwind of $250 million to $350 million, emphasizing the dynamic and uncertain current environment.

Caterpillar Financial Statement Overview

Summary
Caterpillar's financial performance is strong, with robust profitability margins and effective cash management. However, the recent decline in revenue growth and moderate leverage are concerns that need monitoring.
Income Statement
82
Very Positive
Caterpillar's income statement shows strong performance with a gross profit margin of 35.5% and a net profit margin of 15.7% TTM, indicating healthy profitability. However, the revenue growth rate has been negative recently, with a -6.8% decline in TTM revenue compared to the previous annual period, which may pose a concern if it persists.
Balance Sheet
78
Positive
The balance sheet reflects a robust equity ratio of 21.3% TTM, demonstrating a solid financial foundation. The debt-to-equity ratio stands at 2.1, which is moderate but requires monitoring to avoid excessive leverage. Return on equity (ROE) remains healthy at 55.0% TTM, suggesting effective management of shareholder funds.
Cash Flow
80
Positive
Caterpillar's cash flow metrics are positive, with an operating cash flow to net income ratio of 1.13 TTM, indicating strong cash generation relative to earnings. The free cash flow to net income ratio at 0.86 TTM also highlights efficient cash utilization. However, free cash flow has shown a slight decline of -2.7% from the previous annual period.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue64.81B67.06B59.43B50.97B41.75B
Gross Profit23.32B23.26B17.51B15.00B12.08B
EBITDA16.04B15.71B11.97B10.63B7.27B
Net Income10.79B10.34B6.71B6.49B3.00B
Balance Sheet
Total Assets87.76B87.48B81.94B82.79B78.32B
Cash, Cash Equivalents and Short-Term Investments6.89B6.98B7.00B9.25B9.35B
Total Debt38.41B37.88B36.99B37.79B37.16B
Total Liabilities68.27B67.97B66.05B66.28B62.95B
Stockholders Equity19.49B19.49B15.87B16.48B15.33B
Cash Flow
Free Cash Flow8.82B9.79B5.17B4.73B4.21B
Operating Cash Flow12.04B12.88B7.77B7.20B6.33B
Investing Cash Flow-2.45B-5.87B-2.54B-3.08B-1.49B
Financing Cash Flow-9.56B-6.93B-7.28B-4.19B-3.75B

Caterpillar Technical Analysis

Technical Analysis Sentiment
Positive
Last Price430.05
Price Trends
50DMA
378.09
Positive
100DMA
348.27
Positive
200DMA
360.66
Positive
Market Momentum
MACD
15.96
Negative
RSI
75.31
Negative
STOCH
87.37
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CAT, the sentiment is Positive. The current price of 430.05 is above the 20-day moving average (MA) of 410.32, above the 50-day MA of 378.09, and above the 200-day MA of 360.66, indicating a bullish trend. The MACD of 15.96 indicates Negative momentum. The RSI at 75.31 is Negative, neither overbought nor oversold. The STOCH value of 87.37 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CAT.

Caterpillar Risk Analysis

Caterpillar disclosed 27 risk factors in its most recent earnings report. Caterpillar reported the most risks in the "Macro & Political" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Caterpillar Peers Comparison

Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
83
Outperform
$52.83B17.2616.77%3.93%-11.90%-38.21%
77
Outperform
$8.34B13.8315.24%1.50%5.95%-10.59%
72
Outperform
$138.27B24.7024.07%1.24%-22.26%-37.83%
70
Outperform
$203.62B21.1055.67%1.33%-5.58%-7.37%
58
Neutral
HK$14.89B4.69-2.78%5.83%3.80%-54.55%
58
Neutral
$8.20B46.40-13.60%1.08%-23.02%-152.78%
56
Neutral
$16.23B15.6413.26%1.95%-21.99%-52.11%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CAT
Caterpillar
430.05
93.65
27.84%
AGCO
Agco
107.67
12.63
13.29%
CNH
CNH Industrial
12.81
2.83
28.36%
DE
Deere
512.50
145.90
39.80%
OSK
Oshkosh
126.45
14.15
12.60%
PCAR
Paccar
99.48
6.30
6.76%

Caterpillar Corporate Events

Shareholder MeetingsDividends
Caterpillar Increases Dividend Following Shareholders Meeting
Positive
Jun 12, 2025

On June 11, 2025, Caterpillar Inc. held its virtual 2025 Annual Shareholders Meeting where all nominated directors were elected, and the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm was ratified. However, shareholder proposals for a civil rights audit, a report on employee charitable giving match, and the cessation of DEI efforts were not approved. Additionally, the Board of Directors declared a quarterly cash dividend increase to $1.51 per share, reflecting a 10-cent rise from the previous dividend, demonstrating Caterpillar’s strong operating performance and commitment to returning free cash flow to shareholders.

The most recent analyst rating on (CAT) stock is a Hold with a $415.00 price target. To see the full list of analyst forecasts on Caterpillar stock, see the CAT Stock Forecast page.

Private Placements and FinancingBusiness Operations and Strategy
Caterpillar Finalizes $2 Billion Senior Notes Sale
Neutral
May 15, 2025

On May 12, 2025, Caterpillar Inc. finalized an Underwriting Agreement with several underwriters for the sale of $2 billion in senior notes, which closed on March 15, 2025. The proceeds from these notes, due in 2035 and 2055, will be used for general corporate purposes, potentially including debt repayment, and are part of Caterpillar’s strategy to manage its financial obligations and strengthen its market position.

The most recent analyst rating on (CAT) stock is a Hold with a $415.00 price target. To see the full list of analyst forecasts on Caterpillar stock, see the CAT Stock Forecast page.

Stock BuybackDividendsBusiness Operations and StrategyFinancial Disclosures
Caterpillar Reports Q1 2025 Sales Decline
Negative
Apr 30, 2025

Caterpillar Inc. reported its first-quarter 2025 results, revealing a 10% decrease in sales and revenues to $14.2 billion compared to the same period in 2024. The decline was attributed to lower sales volume and unfavorable price realization, with changes in dealer inventories impacting sales. The company’s operating profit margin also decreased, and profit per share fell to $4.20 from $5.75 in the previous year. Despite these challenges, Caterpillar maintained a strong balance sheet, deploying $4.3 billion in cash for share repurchases and dividends, highlighting its commitment to shareholder returns and long-term growth strategy.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 03, 2025