Caterpillar (CAT) AI Stock Analysis

• Market Cap: $349.88B
• Dividend Yield: 0.98%
• Average Volume (3M): 2.76M
• Price to Earnings (P/E): 40.0
• Beta (1Y): 1.09
• Revenue Growth: -1.51%
• EPS Growth: -9.69%
• Country: US
• Employees: 112,900
• Sector: Industrials
• Sector Strength: 72
• Industry: Agricultural - Machinery
• EPS (TTM): 5.16
• Shares Outstanding: 465,287,320
• 10 Day Avg. Volume: 2,957,512
• 30 Day Avg. Volume: 2,761,053
• PEG Ratio: -2.04
• Price to Book (P/B): 12.54
• Price to Sales (P/S): 3.95
• P/FCF Ratio: 26.01
• Enterprise Value/Market Cap: 1.11
• Enterprise Value/Revenue: 5.73
• Enterprise Value/Gross Profit: 17.72
• Enterprise Value/Ebitda: 26.07
• 1Y Price Target: $709.94
• Price Target Upside: -6.56% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 17
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 75 Outperform
• Price Target: $855.00 ▲(12.54% Upside)
• Action: Reiterated Date: 01/30/26
• Date: Action: Reiterated 01/30/26

CAT scores well on fundamentals and trend: strong profitability and free cash flow, plus clear bullish technical positioning above key moving averages. The main offsets are expensive valuation (high P/E and low yield) and earnings-call risks centered on rising tariffs and margin compression despite strong backlog-driven visibility.

Positive Factors

Strong cash generation

Sustained multi‑year free cash flow (> $9B annually, TTM ~ $10.3B) funds capital spending, R&D, and sizable shareholder returns without relying on new financing. Durable cash generation strengthens balance‑sheet flexibility and supports reinvestment and buybacks through cycles.

Record backlog & order visibility

A $51B backlog with majority near‑term delivery provides multi‑quarter revenue visibility, reducing demand volatility and enabling more efficient production planning. This durable demand underpinning supports revenue growth and smoother utilization over the next 12–24 months.

Growing services, digital & autonomy

Expanding high‑margin services, digital offerings, and autonomy deployments build recurring revenue and deepen customer lock‑in. A 1.6M installed base plus autonomy/commercial wins diversifies earnings away from cyclical equipment sales and raises lifetime customer value.

Negative Factors

Rising tariff headwinds

Tariffs of roughly $2.6B materially erode operating margins and increase the structural cost base. Persistent or escalating trade measures can force sustained price increases, margin dilution, or competitiveness losses in key regions, creating a multi‑period earnings drag until mitigated.

Margin compression across segments

Significant year‑over‑year margin declines reflect tariffs, higher manufacturing costs, and mix shifts. If price realization and cost reductions lag, lower structural margins in Construction and Resource Industries will reduce profitability and long‑term free cash flow generation.

Elevated leverage & higher investment needs

Historical leverage near 2x and an inconsistent TTM debt reading reduce balance‑sheet clarity. Combined with rising capex and dealer inventory builds to fulfill backlog, this increases funding risk in downturns and limits flexibility for M&A or incremental shareholder returns.

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 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

Strong profitability and cash generation with healthy margins (TTM gross ~32%, EBIT ~18%, net ~13%) and robust free cash flow (TTM ~$10.3B, +8.3%). Offsets include profit/margin normalization versus 2024 and elevated historical leverage with an inconsistent TTM debt datapoint that reduces balance-sheet clarity.

Income Statement

CAT shows strong profitability and resilience through the cycle. Revenue rebounded sharply from 2020 and continued to expand into 2024, with TTM (Trailing-Twelve-Months) still showing modest growth (+4.5%). Margins remain healthy for the industry (TTM gross margin ~32%, EBIT margin ~18%, net margin ~13%), though profitability is down versus 2024 (net margin ~16.7% in 2024), signaling some mix/price-cost or demand normalization pressure. Overall, earnings power is strong but no longer improving at the 2021–2024 pace.

Balance Sheet

The balance sheet looks improved over time, with equity rising from ~15.3B (2020) to ~21.3B in TTM (Trailing-Twelve-Months), supporting very strong shareholder returns (TTM return on equity ~45%). However, leverage appears elevated in the annual periods (debt-to-equity roughly ~1.9–2.4 from 2020–2024), which increases sensitivity to downturns and funding conditions. The TTM debt value is shown as 0, which is inconsistent with prior years, so the latest leverage picture is less reliable from the provided data.

Cash Flow

Cash generation is solid and supports financial flexibility: operating cash flow is strong (TTM ~11.7B) and free cash flow is robust (TTM ~10.3B) with positive TTM growth (+8.3%). Free cash flow conversion remains decent but not perfect (TTM free cash flow is ~82% of net income), indicating some working-capital or investment drag. Free cash flow also dipped in 2024 versus 2023 before re-accelerating in TTM, suggesting some volatility but an overall healthy trajectory.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	67.59B	64.81B	67.06B	59.43B	50.97B
Gross Profit	21.86B	23.32B	23.26B	17.51B	15.00B
EBITDA	14.86B	16.04B	15.71B	11.41B	11.04B
Net Income	8.87B	10.79B	10.34B	6.71B	6.49B
Balance Sheet
Total Assets	98.58B	87.76B	87.48B	81.94B	82.79B
Cash, Cash Equivalents and Short-Term Investments	9.98B	6.89B	6.98B	7.00B	9.25B
Total Debt	43.33B	38.41B	37.88B	36.99B	37.79B
Total Liabilities	77.27B	68.27B	67.97B	66.05B	66.28B
Stockholders Equity	21.32B	19.49B	19.49B	15.87B	16.48B
Cash Flow
Free Cash Flow	10.27B	8.82B	9.79B	5.17B	4.73B
Operating Cash Flow	11.74B	12.04B	12.88B	7.77B	7.20B
Investing Cash Flow	-4.71B	-2.45B	-5.87B	-2.54B	-3.08B
Financing Cash Flow	-3.90B	-9.56B	-6.93B	-7.28B	-4.19B

Caterpillar Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 759.74
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• 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 759.74 is above the 20-day moving average (MA) of 709.32, above the 50-day MA of 646.13, and above the 200-day MA of 494.43, indicating a bullish trend. The MACD of 36.96 indicates Negative momentum. The RSI at 67.01 is Neutral, neither overbought nor oversold. The STOCH value of 65.36 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	75 Outperform	$349.88B	39.98	43.54%	0.98%	-1.51%	-9.69%
OSK	73 Outperform	$10.73B	17.12	14.90%	1.56%	-2.28%	-0.53%
PCAR	72 Outperform	$65.74B	27.75	12.92%	3.83%	-15.29%	-42.93%
DE	68 Neutral	$160.82B	33.45	19.74%	1.34%	-11.66%	-27.80%
AGCO	64 Neutral	$9.98B	14.12	18.13%	1.10%	-20.09%	121.28%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
CNH	59 Neutral	$15.79B	31.08	6.61%	2.67%	-18.10%	-65.24%

Caterpillar Corporate Events

Caterpillar Posts Record 2025 Sales Despite Margin Compression

On January 29, 2026, Caterpillar reported record fourth-quarter and full-year 2025 results, with sales and revenues climbing 18% year-on-year in the fourth quarter to $19.1 billion and 4% for the full year to an all-time high of $67.6 billion, driven primarily by higher equipment sales to end users across its core segments and supported by largely stable dealer inventories. Despite the topline strength and a record backlog, profitability compressed versus 2024, as operating profit margin fell to 13.9% in the quarter and 16.5% for the year, while reported profit per share declined to $5.12 in the fourth quarter and $18.81 for 2025, though adjusted earnings held more stable; the company still generated robust $11.7 billion in operating cash flow and returned $7.9 billion to shareholders through buybacks and dividends, underscoring its confidence in ongoing demand and long-term value creation for investors and customers.

The most recent analyst rating on (CAT) stock is a Buy with a $719.00 price target. To see the full list of analyst forecasts on Caterpillar stock, see the CAT Stock Forecast page.

Caterpillar announces board leadership transition and governance changes

On January 6, 2026, Caterpillar’s board announced that Executive Chairman and former CEO D. James Umpleby III will retire from the board effective April 1, 2026, after a 45-year career with the company, and that current CEO Joseph E. Creed will assume the additional role of chairman on that date as the board shrinks from ten to nine members. As part of the same leadership reshuffle, long-time director Debra L. Reed-Klages will continue in an enhanced governance role as lead independent director following the board’s decision to rename the presiding director position, underscoring continuity in oversight as Caterpillar transitions to new board leadership after Umpleby’s long tenure shaping its growth strategy and shareholder value creation.

The most recent analyst rating on (CAT) stock is a Hold with a $555.00 price target. To see the full list of analyst forecasts on Caterpillar stock, see the CAT Stock Forecast page.