Why Caterpillar Stock Jumped 60%?
Caterpillar (CAT)’s stock soared 64%, fueled less by faltering revenue and tighter margins, and more by soaring confidence—an 83% jump in its P/E multiple. Behind this surge: a rocky earnings dance, a rising backlog, and bullish AI-driven forecasts that have analysts singing a new tune. Let’s dive deeper.
Below is an analytical breakdown of stock movement into key contributing metrics.
| 1272025 | 1272026 | Change | |
|---|---|---|---|
| Stock Price ($) | 389.6 | 638.9 | 64.0% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 65,664.0 | 64,671.0 | -1.5% |
| Net Income Margin (%) | 16.3% | 14.3% | -11.8% |
| P/E Multiple | 17.7 | 32.3 | 82.7% |
| Shares Outstanding (Mil) | 484.2 | 468.6 | 3.3% |
| Cumulative Contribution | 64.0% |
So what is happening here? The stock jumped 64%, driven by a huge 83% boost in P/E multiple, despite revenue dipping 1.5% and net margin sliding 12%. Let’s explore what’s behind these shifts next.
Here Is Why Caterpillar Stock Moved
- Q4 2024 Earnings Miss: EPS beat, but revenue missed; sales declined 5% YoY, leading to a stock drop.
- Q1 2025 Revenue Decline: Sales and revenue decreased 10% YoY due to lower volumes and unfavorable pricing.
- Q3 2025 Earnings Beat: EPS and revenue beat expectations, driven by higher sales volume and AI data center demand.
- Rising Backlog: Record order backlog near $40 billion signaled strong future demand.
- Q4 2025 Outlook/AI Boost: Anticipated Q4 2025 revenue growth with AI data center demand influencing sentiment.
- Analyst Upgrades: Citigroup raised price target to $710, fueling rally based on AI infrastructure demand.
Our Current Assesment Of CAT Stock
Opinion: We currently find CAT stock unattractive. Why so? Have a look at the full story. Read Buy or Sell CAT Stock to see what drives our current opinion.
Risk: A solid way to gauge risk is by checking how much Caterpillar fell in major market selloffs. It dropped about 52% in the Dot-Com Bubble and even deeper, 73%, during the Global Financial Crisis. The 2018 correction took it down 33%, and the Covid selloff saw a 39% dip. The recent inflation shock trimmed around 32%. Even with its strong fundamentals, CAT hasn’t been immune to big drawdowns when the market turns south.
CAT stock may have seen strong gains recently, but investing in a single stock without detailed, thorough analysis can be risky. The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 — the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.