Caterpillar (CAT) AI Stock Analysis

• Market Cap: $269.66B
• Dividend Yield: 0.98%
• Average Volume (3M): 2.59M
• Price to Earnings (P/E): 29.6
• Beta (1Y): 1.14
• Revenue Growth: -1.51%
• EPS Growth: -9.69%
• Country: US
• Employees: 112,900
• Sector: Industrials
• Sector Strength: 72
• Industry: Agricultural - Machinery
• EPS (TTM): 4.95
• Shares Outstanding: 467,979,580
• 10 Day Avg. Volume: 3,132,612
• 30 Day Avg. Volume: 2,590,820
• PEG Ratio: 1.72
• Price to Book (P/B): 9.06
• Price to Sales (P/S): 2.72
• P/FCF Ratio: 20.02
• Enterprise Value/Market Cap: 0.92
• Enterprise Value/Revenue: 3.84
• Enterprise Value/Gross Profit: 11.32
• Enterprise Value/Ebitda: 16.94
• 1Y Price Target: $612.86
• Price Target Upside: 5.23% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16
• EPS Forecast (FY): 18.62
• Revenue Forecast (FY): $66.34B

• Rating: 76 Outperform
• Price Target: $652.00 ▲(11.95% Upside)

Caterpillar's strong financial performance and positive earnings call are the most significant factors driving the stock score. While technical indicators show bullish momentum, potential overvaluation and high debt levels are notable risks. The company's strategic focus on growth in key segments and mitigating tariff impacts supports a positive outlook.

Positive Factors

Revenue Growth

A 10% increase in sales and revenues to a record $17.6 billion indicates strong market demand and effective business strategies, supporting long-term growth.

Cash Generation

Significant free cash flow generation and shareholder returns demonstrate strong cash management and financial health, ensuring future investment capacity.

Market Position

A growing backlog of $2.4 billion reflects robust demand and a strong market position, indicating sustained future revenue streams.

Negative Factors

High Debt Levels

Despite improvement, a high debt-to-equity ratio indicates reliance on debt financing, which could limit financial flexibility and increase risk.

Tariff Impact

Significant tariff costs impact profit margins and could affect competitive pricing, posing a risk to profitability and market competitiveness.

Regional Sales Decline

Declining sales in Asia Pacific highlight regional market challenges, potentially hindering global revenue diversification and growth.

Caterpillar Business Overview & Revenue Model

Company Description

Caterpillar Inc. (CAT) is a leading global manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and locomotives. Founded in 1925 and headquartered in Peoria, Illinois, Caterpillar operates through several segments including Construction Industries, Resource Industries, Energy & Transportation, and Financial Products. The company is renowned for its extensive range of heavy machinery, including excavators, bulldozers, and backhoe loaders, as well as for its commitment to innovation and sustainability in the heavy equipment sector.

How the Company Makes Money

Caterpillar generates revenue through multiple key streams, primarily from the sale of machinery and equipment, which constitutes the largest portion of its income. The company also earns substantial revenue from its parts and service business, providing aftermarket support for its machinery, which tends to have high margins. Additionally, the Energy & Transportation segment contributes revenue through the sale of engines and power systems. Caterpillar's Financial Products segment offers financing solutions for customers purchasing equipment, thus generating interest income. Strategic partnerships with various industries, particularly in construction and mining, enhance its market reach and revenue potential. Economic cycles, infrastructure spending, and global demand for commodities are significant factors that influence Caterpillar's earnings.

Caterpillar Financial Statement Overview

Summary

Caterpillar demonstrates strong financial health with robust profitability and cash flow generation. The company has improved its leverage position, although it still relies heavily on debt. Consistent revenue growth and strong margins highlight its competitive position, but high debt levels pose a potential risk.

Income Statement

Caterpillar's income statement shows strong profitability with a consistent gross profit margin around 34% to 36% over recent years. The net profit margin has improved to 14.3% in TTM, indicating efficient cost management. Revenue growth has been positive, albeit modest at 2.4% in TTM, following a slight decline in the previous year. The EBIT and EBITDA margins are robust, reflecting effective operational management.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio, which has decreased from 2.42 in 2020 to 1.97 in 2024, indicating improved leverage management. Return on equity is strong at 48.2% in TTM, showcasing effective use of equity to generate profits. However, the equity ratio remains low, suggesting a reliance on debt financing.

Cash Flow

Caterpillar's cash flow statement demonstrates solid cash generation with a significant free cash flow growth of 22.5% in TTM. The operating cash flow to net income ratio is stable, indicating good cash conversion. The free cash flow to net income ratio is strong, suggesting efficient capital expenditure management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	64.67B	64.81B	67.06B	59.43B	50.97B	41.75B
Gross Profit	21.94B	23.32B	23.26B	17.51B	15.00B	12.08B
EBITDA	14.66B	16.04B	15.71B	11.41B	11.04B	6.94B
Net Income	9.26B	10.79B	10.34B	6.71B	6.49B	3.00B
Balance Sheet
Total Assets	93.72B	87.76B	87.48B	81.94B	82.79B	78.32B
Cash, Cash Equivalents and Short-Term Investments	7.54B	6.89B	6.98B	7.00B	9.25B	9.35B
Total Debt	41.53B	38.41B	37.88B	36.99B	37.79B	37.16B
Total Liabilities	73.06B	68.27B	67.97B	66.05B	66.28B	62.95B
Stockholders Equity	20.66B	19.49B	19.49B	15.87B	16.48B	15.33B
Cash Flow
Free Cash Flow	9.48B	8.82B	9.79B	5.17B	4.73B	4.21B
Operating Cash Flow	11.54B	12.04B	12.88B	7.77B	7.20B	6.33B
Investing Cash Flow	-4.48B	-2.45B	-5.87B	-2.54B	-3.08B	-1.49B
Financing Cash Flow	-5.08B	-9.56B	-6.93B	-7.28B	-4.19B	-3.75B

Caterpillar Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 582.41
• 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 582.41 is below the 20-day moving average (MA) of 585.74, above the 50-day MA of 562.80, and above the 200-day MA of 425.80, indicating a neutral trend. The MACD of 6.07 indicates Positive momentum. The RSI at 52.33 is Neutral, neither overbought nor oversold. The STOCH value of 24.79 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
CAT	76 Outperform	$269.66B	29.57	46.30%	0.98%	-1.51%	-9.69%
PCAR	74 Outperform	$58.60B	21.84	14.15%	3.83%	-15.29%	-42.93%
OSK	71 Outperform	$8.25B	12.71	15.42%	1.56%	-2.28%	-0.53%
DE	66 Neutral	$127.26B	25.43	20.61%	1.34%	-11.66%	-27.80%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
AGCO	59 Neutral	$7.89B	21.07	8.69%	1.10%	-20.09%	121.28%
CNH	55 Neutral	$11.98B	20.15	7.77%	2.65%	-18.10%	-65.24%

Caterpillar Corporate Events

Caterpillar Reports 10% Sales Increase in Q3 2025

Caterpillar Inc. reported a 10% increase in third-quarter 2025 sales and revenues, reaching $17.6 billion, compared to $16.1 billion in the same quarter of 2024. Despite the revenue growth driven by higher equipment sales, the company’s profit per share decreased to $4.88 from $5.06 in the previous year, impacted by a higher estimated global annual effective tax rate and a net discrete tax charge. The company deployed $1.1 billion in cash for dividends and share repurchases, maintaining a strong cash position with $7.5 billion at the end of the quarter.