Caterpillar (CAT) AI Stock Analysis

• Market Cap: $198.20B
• Dividend Yield: 1.36%
• Average Volume (3M): 3.01M
• Price to Earnings (P/E): 21.5
• Beta (1Y): 1.11
• Revenue Growth: -4.87%
• EPS Growth: -10.47%
• Country: US
• Employees: 112,900
• Sector: Industrials
• Sector Strength: 73
• Industry: Agricultural - Machinery
• EPS (TTM): 4.72
• Shares Outstanding: 468,478,900
• 10 Day Avg. Volume: 2,303,448
• 30 Day Avg. Volume: 3,013,789
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.10
• Enterprise Value/Revenue: 3.46
• Enterprise Value/Gross Profit: 10.07
• Enterprise Value/Ebitda: 15.19
• 1Y Price Target: $456.17
• Price Target Upside: 7.90% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16

• Rating: 66 Neutral
• Price Target: $449.00 ▲(6.20% Upside)

Caterpillar's overall stock score reflects a balance of strong profitability and operational efficiency against challenges such as declining revenue and high leverage. Technical analysis indicates mixed momentum, while valuation suggests potential overvaluation. The earnings call and corporate events highlight both opportunities and risks, with strong backlog growth and financial flexibility countered by tariff headwinds.

Positive Factors

Financial Performance

CAT Financial's contribution to overall profits increased significantly, reflecting a positive turnaround from a previous loss.

Operational Efficiency

The company has successfully cut fixed costs by restructuring its Resource business, which should provide earnings upside as volumes increase.

Negative Factors

Cost Challenges

The combination of incremental tariff headwinds and higher discounting reserves taken by competitors poses a challenge for CAT's ability to manage risks.

Tariff Impact

New guidance applies a 50% tariff rate on steel and aluminum content, significantly impacting CAT's operating margin.

Caterpillar Business Overview & Revenue Model

Company Description

Caterpillar 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 Money

Caterpillar generates revenue through several key streams, including the sale of new equipment and engines, aftermarket parts, and repair services. The majority of its revenue comes from the sale of machinery and engines to construction and mining industries, which are cyclical and depend on global economic conditions. The company also benefits from aftermarket services, which provide ongoing revenue through parts, maintenance, and repair services for existing equipment. Furthermore, Caterpillar has established significant partnerships with various firms and governmental entities, enhancing its market presence and providing integrated solutions. Factors contributing to its earnings include global infrastructure investments, commodity prices affecting the mining sector, and technological advancements in equipment efficiency and sustainability.

Caterpillar Financial Statement Overview

Summary

Caterpillar's financial statements demonstrate strong profitability with a net profit margin of 15.7% and a healthy ROE of 55.0%. However, recent revenue decline and moderate leverage pose potential risks.

Income Statement

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

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

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	63.14B	64.81B	67.06B	59.43B	50.97B	41.75B
Gross Profit	21.68B	23.32B	23.26B	17.51B	15.00B	12.08B
EBITDA	14.38B	16.04B	15.71B	11.41B	11.04B	6.94B
Net Income	9.44B	10.79B	10.34B	6.71B	6.49B	3.00B
Balance Sheet
Total Assets	90.33B	87.76B	87.48B	81.94B	82.79B	78.32B
Cash, Cash Equivalents and Short-Term Investments	5.44B	6.89B	6.98B	7.00B	9.25B	9.35B
Total Debt	40.75B	38.41B	37.88B	36.99B	37.79B	37.16B
Total Liabilities	71.66B	68.27B	67.97B	66.05B	66.28B	62.95B
Stockholders Equity	18.66B	19.49B	19.49B	15.87B	16.48B	15.33B
Cash Flow
Free Cash Flow	7.74B	8.82B	9.79B	5.17B	4.73B	4.21B
Operating Cash Flow	11.37B	12.04B	12.88B	7.77B	7.20B	6.33B
Investing Cash Flow	-4.20B	-2.45B	-5.87B	-2.54B	-3.08B	-1.49B
Financing Cash Flow	-5.98B	-9.56B	-6.93B	-7.28B	-4.19B	-3.75B

Caterpillar Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 422.78
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 422.78 is above the 20-day moving average (MA) of 420.53, above the 50-day MA of 416.34, and above the 200-day MA of 365.90, indicating a bullish trend. The MACD of 2.05 indicates Positive momentum. The RSI at 52.37 is Neutral, neither overbought nor oversold. The STOCH value of 43.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CAT.

Caterpillar Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
OSK	78 Outperform	$8.93B	14.01	15.52%	1.43%	0.41%	-3.90%
PCAR	73 Outperform	$52.01B	16.98	16.77%	4.06%	-11.92%	-38.21%
CAT	66 Neutral	$198.20B	21.51	52.73%	1.36%	-4.87%	-10.47%
Sector *	64 Neutral	$10.75B	15.57	7.24%	2.01%	2.80%	-14.32%
DE	63 Neutral	$127.94B	24.74	21.59%	1.31%	-20.63%	-34.82%
AGCO	60 Neutral	$8.28B	83.45	2.42%	1.38%	-24.27%	-76.31%
CNH	56 Neutral	$14.33B	17.44	10.79%	2.18%	-21.70%	-57.68%

Caterpillar Corporate Events

Caterpillar Announces New $3.5 Billion Credit Facility

On August 28, 2025, Caterpillar Inc. announced the creation of a new 364-Day revolving credit facility, replacing the previous one, with an aggregate commitment of up to $3.5 billion. This facility, along with amendments to existing Three-Year and Five-Year credit agreements, aims to enhance the company’s financial flexibility for general corporate purposes. The updated agreements extend the expiration dates and provide unsecured revolving credit facilities totaling up to $8 billion. These financial arrangements require Caterpillar to maintain specific financial covenants, including a consolidated net worth of at least $9 billion, ensuring robust financial health and operational capacity.

Caterpillar Faces Significant Tariff Impact in Q3 2025

Caterpillar Inc. announced that the impact of newly introduced tariffs will significantly affect its financial results for the third quarter and the entirety of 2025. Since the company’s earnings release on August 5, 2025, additional tariffs have been clarified, leading to an expected net impact of $500 million to $600 million for the third quarter and $1.5 to $1.8 billion for the year. Despite these challenges, the company does not anticipate changes to its sales and revenue outlook but expects its full-year adjusted operating profit margin to be near the lower end of its target range. Further updates will be provided in the third-quarter earnings announcement on October 29, 2025.

Caterpillar Reports Q2 2025 Financial Results Decline

Caterpillar Inc. reported its second-quarter 2025 financial results, showing a slight decline in sales and revenues to $16.6 billion, down 1% from the previous year. The decrease was attributed to unfavorable price realization, although it was partially offset by higher sales volumes. The company’s profit per share also decreased from $5.48 in 2024 to $4.62 in 2025. Despite these declines, the company maintained strong operational cash flow and continued to invest in share repurchases and dividends, reflecting its commitment to shareholder returns. The results highlight the company’s resilience in a challenging market environment, supported by robust demand in the Energy & Transportation segment.

Caterpillar Increases Dividend Following Shareholders Meeting

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.