Caterpillar (CAT)
Market Price (3/27/2026): $706.49 | Market Cap: $329.3 BilSector: Industrials | Industry: Construction Machinery & Heavy Transportation Equipment
Caterpillar (CAT)
Market Price (3/27/2026): $706.49Market Cap: $329.3 BilSector: IndustrialsIndustry: Construction Machinery & Heavy Transportation Equipment
Investment Highlights Why It Matters Detailed financial logic regarding cash flow yields vs trend-riding momentum.
| Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 17%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 11%, CFO LTM is 12 Bil, FCF LTM is 7.5 Bil | Stock price has recently run up significantly12M Rtn12 month market price return is 109% |
| Low stock price volatilityVol 12M is 34% | Key risksCAT key risks include [1] a high vulnerability to cyclical downturns and shifts in U.S. Show more. |
| Megatrend and thematic driversMegatrends include Automation & Robotics, Future of Freight, Sustainable Infrastructure, Hydrogen Economy, Show more. |
| Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 17%, FCF/Rev LTMFree Cash Flow / Revenue (Sales), Last Twelve Months (LTM) is 11%, CFO LTM is 12 Bil, FCF LTM is 7.5 Bil |
| Low stock price volatilityVol 12M is 34% |
| Megatrend and thematic driversMegatrends include Automation & Robotics, Future of Freight, Sustainable Infrastructure, Hydrogen Economy, Show more. |
| Stock price has recently run up significantly12M Rtn12 month market price return is 109% |
| Key risksCAT key risks include [1] a high vulnerability to cyclical downturns and shifts in U.S. Show more. |
Qualitative Assessment
AI Analysis | Feedback
1. Caterpillar's strong fourth-quarter and full-year 2025 financial results significantly exceeded analyst expectations, driven by robust demand. The company reported fourth-quarter 2025 adjusted earnings per share of $5.16, surpassing the consensus estimate of $4.67 by $0.49, representing a 10.41% surprise. Quarterly revenue reached $19.13 billion, beating analysts' expectations of $17.81 billion by approximately $1.1 billion, an increase of 18% year-over-year. Furthermore, Caterpillar achieved its highest full-year sales and revenues in its history in 2025, totaling $67.6 billion, up 4% from 2024. A record backlog, which surged by 71% year-over-year to $51.2 billion, also provided strong future revenue visibility.
2. Positive analyst sentiment and upgraded price targets contributed to the stock's upward momentum. Analysts maintained a consensus "Moderate Buy" rating for Caterpillar. The average 12-month price target for CAT increased by 7.8%, rising to $682.78 from $633.35. Recent analyst ratings have suggested an implied upside of 18.63% for the stock.
Show more
Stock Movement Drivers
Fundamental Drivers
The 22.4% change in CAT stock from 11/30/2025 to 3/26/2026 was primarily driven by a 27.1% change in the company's P/E Multiple.| (LTM values as of) | 11302025 | 3262026 | Change |
|---|---|---|---|
| Stock Price ($) | 574.42 | 703.19 | 22.4% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 64,671 | 67,589 | 4.5% |
| Net Income Margin (%) | 14.3% | 13.1% | -8.3% |
| P/E Multiple | 29.0 | 36.9 | 27.1% |
| Shares Outstanding (Mil) | 469 | 466 | 0.5% |
| Cumulative Contribution | 22.4% |
Market Drivers
11/30/2025 to 3/26/2026| Return | Correlation | |
|---|---|---|
| CAT | 22.4% | |
| Market (SPY) | -5.3% | 65.7% |
| Sector (XLI) | 5.3% | 79.8% |
Fundamental Drivers
The 68.7% change in CAT stock from 8/31/2025 to 3/26/2026 was primarily driven by a 77.8% change in the company's P/E Multiple.| (LTM values as of) | 8312025 | 3262026 | Change |
|---|---|---|---|
| Stock Price ($) | 416.86 | 703.19 | 68.7% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 63,139 | 67,589 | 7.0% |
| Net Income Margin (%) | 14.9% | 13.1% | -12.1% |
| P/E Multiple | 20.7 | 36.9 | 77.8% |
| Shares Outstanding (Mil) | 470 | 466 | 0.8% |
| Cumulative Contribution | 68.7% |
Market Drivers
8/31/2025 to 3/26/2026| Return | Correlation | |
|---|---|---|
| CAT | 68.7% | |
| Market (SPY) | 0.6% | 54.2% |
| Sector (XLI) | 6.9% | 68.1% |
Fundamental Drivers
The 107.3% change in CAT stock from 2/28/2025 to 3/26/2026 was primarily driven by a 144.6% change in the company's P/E Multiple.| (LTM values as of) | 2282025 | 3262026 | Change |
|---|---|---|---|
| Stock Price ($) | 339.28 | 703.19 | 107.3% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 64,809 | 67,589 | 4.3% |
| Net Income Margin (%) | 16.7% | 13.1% | -21.1% |
| P/E Multiple | 15.1 | 36.9 | 144.6% |
| Shares Outstanding (Mil) | 480 | 466 | 2.9% |
| Cumulative Contribution | 107.3% |
Market Drivers
2/28/2025 to 3/26/2026| Return | Correlation | |
|---|---|---|
| CAT | 107.3% | |
| Market (SPY) | 9.8% | 68.0% |
| Sector (XLI) | 19.9% | 77.0% |
Fundamental Drivers
The 208.2% change in CAT stock from 2/28/2023 to 3/26/2026 was primarily driven by a 109.6% change in the company's P/E Multiple.| (LTM values as of) | 2282023 | 3262026 | Change |
|---|---|---|---|
| Stock Price ($) | 228.15 | 703.19 | 208.2% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 59,427 | 67,589 | 13.7% |
| Net Income Margin (%) | 11.3% | 13.1% | 16.5% |
| P/E Multiple | 17.6 | 36.9 | 109.6% |
| Shares Outstanding (Mil) | 517 | 466 | 11.0% |
| Cumulative Contribution | 208.2% |
Market Drivers
2/28/2023 to 3/26/2026| Return | Correlation | |
|---|---|---|
| CAT | 208.2% | |
| Market (SPY) | 69.4% | 61.3% |
| Sector (XLI) | 67.2% | 74.6% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| CAT Return | 16% | 19% | 26% | 25% | 60% | 26% | 335% |
| Peers Return | 19% | 7% | 22% | 8% | 24% | 14% | 137% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | -4% | 75% |
Monthly Win Rates [3] | |||||||
| CAT Win Rate | 58% | 50% | 50% | 67% | 50% | 67% | |
| Peers Win Rate | 62% | 43% | 48% | 53% | 65% | 67% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 33% | |
Max Drawdowns [4] | |||||||
| CAT Max Drawdown | -0% | -20% | -13% | -6% | -24% | 0% | |
| Peers Max Drawdown | -3% | -23% | -11% | -11% | -18% | 0% | |
| S&P 500 Max Drawdown | -1% | -25% | -1% | -2% | -15% | -5% | |
[1] Cumulative total returns since the beginning of 2021
[2] Peers: DE, PCAR, CMI, TEX, OSK. See CAT Returns vs. Peers.
[3] Win Rate = % of calendar months in which monthly returns were positive
[4] Max drawdown represents maximum peak-to-trough decline within a year
[5] 2026 data is for the year up to 3/26/2026 (YTD)
How Low Can It Go
| Event | CAT | S&P 500 |
|---|---|---|
| 2022 Inflation Shock | ||
| % Loss | -33.6% | -25.4% |
| % Gain to Breakeven | 50.7% | 34.1% |
| Time to Breakeven | 101 days | 464 days |
| 2020 Covid Pandemic | ||
| % Loss | -39.0% | -33.9% |
| % Gain to Breakeven | 63.9% | 51.3% |
| Time to Breakeven | 170 days | 148 days |
| 2018 Correction | ||
| % Loss | -34.3% | -19.8% |
| % Gain to Breakeven | 52.1% | 24.7% |
| Time to Breakeven | 748 days | 120 days |
| 2008 Global Financial Crisis | ||
| % Loss | -74.5% | -56.8% |
| % Gain to Breakeven | 292.3% | 131.3% |
| Time to Breakeven | 639 days | 1,480 days |
Compare to DE, PCAR, CMI, TEX, OSK
In The Past
Caterpillar's stock fell -33.6% during the 2022 Inflation Shock from a high on 5/17/2021. A -33.6% loss requires a 50.7% gain to breakeven.
Preserve Wealth
Limiting losses and compounding gains is essential to preserving wealth.
Asset Allocation
Actively managed asset allocation strategies protect wealth. Learn more.
About Caterpillar (CAT)
AI Analysis | Feedback
1. John Deere for industrial construction and mining equipment.
2. The General Motors of bulldozers and excavators.
AI Analysis | Feedback
- Construction Equipment: Manufactures and sells a wide range of machinery for construction, including excavators, loaders, and dozers.
- Mining Equipment: Provides specialized heavy machinery for mining operations, such as shovels, drills, and large mining trucks, along with support solutions.
- Engines, Turbines, and Power Systems: Offers reciprocating engines, industrial gas turbines, generator sets, and integrated systems for various industrial and power generation applications.
- Locomotives and Rail Services: Provides diesel-electric locomotives, rail components, and related services for the global railway industry.
- Financial Services: Offers operating and finance leases, installment sale contracts, working capital loans, and insurance products to customers.
- Aftermarket Parts and Components: Manufactures and sells essential parts and consumables like filters, fluids, undercarriage, and ground engaging tools for its machinery.
AI Analysis | Feedback
Caterpillar Inc. (CAT) primarily sells to other companies rather than individuals. Its major customers fall into the following categories:
- Construction Companies: These include companies involved in large-scale infrastructure projects, residential and commercial construction, road building, and site preparation, which utilize Caterpillar's wide range of construction equipment like excavators, loaders, dozers, and pavers.
- Mining Companies: Enterprises engaged in surface and underground mining operations for various minerals and resources are major customers, relying on Caterpillar's extensive line of mining trucks, shovels, drills, and other heavy equipment designed for resource extraction.
- Energy and Transportation Companies: This category encompasses businesses in sectors such as electric power generation, oil and gas exploration and production, marine transportation, and rail industries, which purchase Caterpillar's engines, generator sets, industrial gas turbines, and locomotives.
AI Analysis | Feedback
nullAI Analysis | Feedback
Here is the management team for Caterpillar Inc.:Joseph E. Creed, Chief Executive Officer
Joseph E. Creed became Chief Executive Officer of Caterpillar Inc. on May 1, 2025, and will assume the role of Chairman of the Board of Directors effective April 1, 2026. He joined Caterpillar in 1997 and has held various positions of increasing responsibility, including Chief Financial Officer for Caterpillar's Energy & Transportation segment in 2013, Senior Vice President of Caterpillar Finance Services in 2017, and interim Chief Financial Officer in 2018. He was promoted to Group President of Energy & Transportation in 2021 and named Chief Operating Officer in 2023. Mr. Creed graduated from Western Illinois University with a bachelor's degree in accounting.
Andrew Bonfield, Chief Financial Officer
Andrew Bonfield was appointed Chief Financial Officer of Caterpillar Inc. in September 2018. He brings more than three decades of financial expertise to the role. Prior to joining Caterpillar, Mr. Bonfield served as Group CFO and board member of National Grid plc, CFO at Cadbury plc, and Executive Vice President and CFO at Bristol Myers Squibb. He also held roles as finance director of BG Group plc and CFO of Smithkline Beecham plc. Mr. Bonfield is a chartered accountant and holds a Bachelor of Commerce degree from the University of Natal in Durban, South Africa. He also serves as a non-executive director and chairman of the audit committee at Reckitt Benckiser Group plc. Mr. Bonfield was the first CFO appointed from outside Caterpillar.
George A. Moubayed, Chief Sustainability and Strategy Officer and Senior Vice President
George Moubayed is the Chief Sustainability and Strategy Officer and a Senior Vice President of Caterpillar Inc., responsible for the Enterprise Strategy Division. He oversees the execution of Caterpillar's strategy for long-term profitable growth. Mr. Moubayed joined Caterpillar in 1997 and has held several leadership positions, including Vice President and General Manager for load and haul products in Resource Industries, and Vice President of Aftermarket Solutions in Resource Industries. He has a bachelor's degree in engineering from McGill University in Montreal, Canada.
David (Dave) T. Walton, President and Chief Executive Officer of Caterpillar Financial Services Corporation and Senior Vice President
David T. Walton is the President and Chief Executive Officer of Caterpillar Financial Services Corporation (Cat Financial) and a Senior Vice President of Caterpillar Inc. He is responsible for the Financial Products Division, which includes Cat Financial and Cat Financial Insurance Services. Mr. Walton joined Cat Financial in 1989 and has held various credit, portfolio management, and sales positions in the United States. His international experience includes serving as managing director of Northern Europe and vice president for Asia-Pacific operations. He also formed and led Cat Financial's global mining finance organization. Mr. Walton holds a bachelor's degree in accounting from Indiana University and a master's degree in business administration from Keller Graduate School.
Ogi Redzic, Chief Digital Officer and Senior Vice President
Ogi Redzic is the Chief Digital Officer and a Senior Vice President of Caterpillar Inc., responsible for Cat Digital. He manages key components of the company's digital and marketing portfolios, including global marketing & brand, connectivity, enterprise data, analytics and AI, and eCommerce. Before joining Caterpillar in 2018, Mr. Redzic was the Alliance Senior Vice President of Connected Vehicles and Mobility Services at Renault-Nissan Alliance. He has more than 20 years of experience in leadership positions in corporate and start-up environments, including roles at Mitsubishi, Nokia HERE, NAVTEQ, PCTEL, Inc., cyberPIXIE, and Motorola. Mr. Redzic holds a bachelor's degree in computer science from Northeastern Illinois University, a master's degree in computer science from the Illinois Institute of Technology, and an MBA from the Kellogg School of Management at Northwestern University.
AI Analysis | Feedback
Here are the key risks to Caterpillar Inc.'s business:
- Trade Policy and Tariffs: Caterpillar faces significant financial headwinds due to persistent trade policies and tariffs, leading to substantial costs and compressing operating margins. For instance, the company adjusted its tariff guidance to an estimated impact of between $1.60 billion and $1.75 billion for the full 2025 fiscal year. These costs are projected to remain substantial, with an estimated incremental cost of $2.6 billion in 2026, directly impacting operating margins and segment profits.
- Cyclical Demand and Macroeconomic Vulnerability: Caterpillar's core business, heavily reliant on the construction and mining sectors, is exposed to the cyclical nature of these industries. Revenue and profitability are susceptible to economic downturns, fluctuations in commodity prices, project funding, and overall macroeconomic conditions. This vulnerability can lead to rapid declines in equipment purchases and sales volumes, exacerbated by risks of dealer inventory destocking.
- Intensifying Competitive Pressure: The company faces aggressive competition, particularly in the North American construction market. Competitors, especially from China, have the advantage of lower labor costs and better access to raw materials and components, which can lead to market share loss and negatively impact Caterpillar's pricing power and profitability. Deere & Company and Komatsu are actively strengthening their presence in key markets, indicating escalating competitive challenges.
AI Analysis | Feedback
There are two clear emerging threats for Caterpillar:
- Rapid Electrification of Heavy Equipment: A significant industry shift towards battery-electric and hydrogen-powered machinery, particularly in construction and mining. While Caterpillar is investing in these technologies, the swift pace of adoption, driven by environmental regulations, sustainability goals, and operating cost benefits, could disrupt its dominant position in diesel-powered equipment. Agile new entrants or existing competitors fully committing to electric fleets could gain market share rapidly, challenging Caterpillar's traditional product lines and potentially cannibalizing its legacy engine and equipment sales faster than its new electric offerings can compensate.
- Decarbonization and Shift Away from Fossil Fuels in Energy & Transportation: The global push for cleaner energy solutions, including renewable power generation (solar, wind) and advanced energy storage, poses a direct threat to Caterpillar's Energy & Transportation segment. This segment heavily relies on manufacturing and selling diesel and natural gas engines and generator sets. As industries, marine, and power generation sectors increasingly transition to alternative fuels (e.g., hydrogen) or completely bypass internal combustion engines in favor of electric grids powered by renewables, the demand for Caterpillar's traditional fossil fuel-based power solutions could decline significantly.
AI Analysis | Feedback
Caterpillar (CAT) operates in several significant global markets for its main products and services.
Construction Equipment
The global construction equipment market size was valued at approximately USD 242.17 billion in 2025 and is projected to reach USD 471.25 billion by 2033, demonstrating a Compound Annual Growth Rate (CAGR) of 8.7% from 2026 to 2033. Asia Pacific is noted as the dominant region in this market, holding a substantial share of the global revenue in 2025.
Mining Equipment
The global mining equipment market size was estimated at USD 95.97 billion in 2024 and is anticipated to grow to USD 150.11 billion by 2032, at a CAGR of 5.75% over the forecast period. Asia-Pacific leads the global mining equipment market, driven by significant mining activities, rapid industrialization, and large-scale infrastructure development projects in countries like China, India, and Australia.
Diesel and Natural Gas Engines
The global diesel engine market size reached USD 243.8 billion in 2025 and is expected to grow to USD 318.7 billion by 2034, with a CAGR of 3.02% during the period of 2026-2034. For diesel engines specifically used for power generation, the global market size was valued at USD 49.9 billion in 2025 and is projected to reach USD 93.1 billion by 2033, expanding at a CAGR of 8.2% from 2026 to 2033. Asia Pacific held the largest share of the diesel engine for power generation market in 2025.
Industrial Gas Turbines
The global industrial gas turbine market size was USD 9.55 billion in 2025 and is expected to increase from USD 9.85 billion in 2026 to USD 12.16 billion by 2034, at a CAGR of 2.67%. Another estimate places the global industrial gas turbine market at USD 7.3 billion in 2024, projected to grow to USD 12.2 billion in 2034 with a CAGR of 5.1% from 2025 to 2034. Asia-Pacific accounted for 45.60% of the global revenue in 2025.
Locomotives and Rail-related Products
The global locomotive market size was valued at USD 14.42 billion in 2025 and is projected to grow to USD 31.25 billion by 2034, exhibiting a CAGR of 9.43% from 2026 to 2034. Asia Pacific dominated the global locomotive market with a share of 52.63% in 2025.
AI Analysis | Feedback
Caterpillar Inc. (CAT) is expected to drive future revenue growth over the next 2-3 years through several key factors:
- Strong Backlog and Volume Growth: Caterpillar holds a record backlog of $51 billion, a significant portion of which is anticipated to be delivered within the next 12 months, providing substantial momentum and expected volume growth across all primary business segments.
- Increased Demand for Power Generation: The Energy & Transportation segment is poised for robust growth, particularly from rising energy demands for data centers and hyperscalers supporting cloud computing and generative AI. The company has secured large orders for generator sets for data center prime power, with deliveries scheduled through 2027.
- Growth in Services Revenue: Caterpillar is strategically accelerating its services revenue, targeting an annual figure of $28 billion by 2026. This growth is driven by repower programs, equipment upgrades, and long-term maintenance contracts, capitalizing on the company's extensive global dealer network and connected assets.
- Positive Price Realization: Caterpillar projects positive price realization, with approximately 2% favorable price adjustments contributing to sales growth across all three primary segments in 2026.
- Infrastructure Investment and Reshoring: The Construction Industries segment is expected to benefit from infrastructure tailwinds, including government funding (such as IIGJA funding), accelerated investment in data center construction, and reshoring initiatives in U.S. manufacturing, all of which are driving demand for construction equipment.
AI Analysis | Feedback
Share Repurchases
- In June 2024, Caterpillar's Board of Directors increased its share repurchase authorization by $20 billion, bringing the total current authorization to approximately $21.8 billion. This authorization was initially launched in 2022 and has no expiration date.
- Caterpillar returned over $10 billion to shareholders through share repurchases and dividends in 2024.
- In 2025, the company deployed $7.9 billion of cash for share repurchases and dividends.
Share Issuance
- The number of outstanding shares has consistently declined over the past few years, indicating net share repurchases rather than issuances.
- Caterpillar's shares outstanding were 467.98 million at the end of 2025, a 3.49% decline from 2024.
- Shares outstanding were 477.932 million in 2024, a 4.71% decrease from 2023.
Outbound Investments
- In October 2025, Caterpillar acquired RPMGlobal Holdings Limited, a provider of mine design, planning, and scheduling software, for $728 million.
- The company acquired Tangent Energy Solutions, Inc. in May 2022, focusing on energy usage monitoring solutions for commercial and industrial sectors.
- Caterpillar also acquired CarbonPoint Solutions in September 2021, a company specializing in carbon capture technology.
Capital Expenditures
- Capital expenditures increased consistently from 2021 to 2025, peaking at $4.286 billion in 2025.
- For 2026, projected capital expenditures are expected to be around $3.5 billion, primarily for capacity expansion.
- Caterpillar is making significant investments in advanced technologies such as autonomy, alternative fuels, connectivity, digital, and electrification to meet customer demands. Notably, in October 2025, a $725 million capital expansion was announced for its Lafayette, Indiana engine facility to boost engine production, particularly for data centers.
Latest Trefis Analyses
Trade Ideas
Select ideas related to CAT.
| Date | Ticker | Company | Category | Trade Strategy | 6M Fwd Rtn | 12M Fwd Rtn | 12M Max DD |
|---|---|---|---|---|---|---|---|
| 02272026 | EFX | Equifax | Monopoly | MY | Getting CheaperMonopoly-Like with P/S DeclineLarge cap with monopoly-like margins or cash flow generation and getting cheaper based on P/S multiple | 0.0% | 0.0% | 0.0% |
| 02202026 | LZ | LegalZoom.com | Dip Buy | DB | CFO/Rev | Low D/EDip Buy with High Cash Flow MarginsBuying dips for companies with significant cash flows from operations and reasonable debt / market cap | 7.2% | 7.2% | -5.0% |
| 02132026 | ADP | Automatic Data Processing | Dip Buy | DB | P/E OPMDip Buy with Low PE and High MarginBuying dips for companies with tame PE and meaningfully high operating margin | 1.1% | 1.1% | -3.0% |
| 02132026 | TREX | Trex | Dip Buy | DB | P/E OPMDip Buy with Low PE and High MarginBuying dips for companies with tame PE and meaningfully high operating margin | -3.2% | -3.2% | -5.9% |
| 02132026 | PCTY | Paylocity | Dip Buy | DB | CFO/Rev | Low D/EDip Buy with High Cash Flow MarginsBuying dips for companies with significant cash flows from operations and reasonable debt / market cap | -0.6% | -0.6% | -4.8% |
Research & Analysis
Invest in Strategies
Wealth Management
Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 336.63 |
| Mkt Cap | 66.9 |
| Rev LTM | 31,057 |
| Op Inc LTM | 3,416 |
| FCF LTM | 2,708 |
| FCF 3Y Avg | 2,378 |
| CFO LTM | 4,018 |
| CFO 3Y Avg | 3,720 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | -1.9% |
| Rev Chg 3Y Avg | 5.7% |
| Rev Chg Q | 4.8% |
| QoQ Delta Rev Chg LTM | 1.2% |
| Op Mgn LTM | 11.0% |
| Op Mgn 3Y Avg | 12.2% |
| QoQ Delta Op Mgn LTM | -0.5% |
| CFO/Rev LTM | 13.1% |
| CFO/Rev 3Y Avg | 11.3% |
| FCF/Rev LTM | 7.5% |
| FCF/Rev 3Y Avg | 6.7% |
Valuation
| Median | |
|---|---|
| Name | |
| Mkt Cap | 66.9 |
| P/S | 2.2 |
| P/EBIT | 17.0 |
| P/E | 25.6 |
| P/CFO | 17.0 |
| Total Yield | 6.1% |
| Dividend Yield | 1.3% |
| FCF Yield 3Y Avg | 4.9% |
| D/E | 0.2 |
| Net D/E | 0.1 |
Returns
| Median | |
|---|---|
| Name | |
| 1M Rtn | -10.8% |
| 3M Rtn | 8.9% |
| 6M Rtn | 24.2% |
| 12M Rtn | 47.7% |
| 3Y Rtn | 87.7% |
| 1M Excs Rtn | -2.8% |
| 3M Excs Rtn | 14.6% |
| 6M Excs Rtn | 25.5% |
| 12M Excs Rtn | 34.7% |
| 3Y Excs Rtn | 19.7% |
Comparison Analyses
Segment Financials
Assets by Segment| $ Mil | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Financial Products Segment | 36,925 | 35,685 | 34,269 | 34,860 | 34,278 |
| Liabilities included in segment assets | 11,973 | 11,781 | 12,519 | 10,777 | 8,466 |
| Energy & Transportation | 11,772 | 10,555 | 9,455 | 9,253 | 8,582 |
| Cash and cash equivalents | 6,165 | 6,106 | 6,042 | 8,428 | 8,822 |
| Resource Industries | 5,548 | 5,742 | 5,775 | 5,962 | 6,035 |
| Construction Industries | 5,546 | 5,384 | 5,168 | 4,547 | 4,259 |
| Property, plant and equipment - net and other assets | 4,808 | 6,548 | 4,234 | 4,056 | 2,833 |
| Goodwill and intangible assets | 4,478 | 4,452 | 4,248 | 4,859 | 4,847 |
| Deferred income taxes | 3,194 | 2,668 | 2,098 | 1,735 | 1,413 |
| All Other Segment | 1,937 | 1,890 | 1,828 | 1,678 | 1,717 |
| Other | -1,022 | -166 | -630 | -706 | -392 |
| Inventory methodology differences | -3,560 | -3,169 | -3,063 | -2,656 | -2,536 |
| Total | 87,764 | 87,476 | 81,943 | 82,793 | 78,324 |
Price Behavior
| Market Price | $703.19 | |
| Market Cap ($ Bil) | 327.8 | |
| First Trading Date | 01/02/1962 | |
| Distance from 52W High | -9.3% | |
| 50 Days | 200 Days | |
| DMA Price | $704.95 | $539.46 |
| DMA Trend | up | up |
| Distance from DMA | -0.2% | 30.3% |
| 3M | 1YR | |
| Volatility | 36.3% | 34.0% |
| Downside Capture | 93.41 | 115.59 |
| Upside Capture | 256.58 | 177.27 |
| Correlation (SPY) | 61.2% | 67.5% |
| 1M | 2M | 3M | 6M | 1Y | 3Y | |
|---|---|---|---|---|---|---|
| Beta | 1.90 | 1.85 | 2.13 | 1.52 | 1.17 | 1.20 |
| Up Beta | 3.20 | 2.84 | 2.45 | 1.03 | 0.94 | 1.05 |
| Down Beta | 2.75 | 1.93 | 2.16 | 1.70 | 1.22 | 1.21 |
| Up Capture | 254% | 290% | 330% | 296% | 259% | 297% |
| Bmk +ve Days | 9 | 20 | 31 | 70 | 142 | 431 |
| Stock +ve Days | 10 | 24 | 35 | 72 | 142 | 407 |
| Down Capture | -0% | 36% | 119% | 90% | 105% | 105% |
| Bmk -ve Days | 12 | 21 | 30 | 54 | 109 | 320 |
| Stock -ve Days | 11 | 17 | 26 | 52 | 109 | 345 |
[1] Upside and downside betas calculated using positive and negative benchmark daily returns respectively
Based On 1-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with CAT | |
|---|---|---|---|---|
| CAT | 108.7% | 34.0% | 2.20 | - |
| Sector ETF (XLI) | 21.3% | 19.2% | 0.88 | 76.6% |
| Equity (SPY) | 13.1% | 18.9% | 0.52 | 67.7% |
| Gold (GLD) | 45.0% | 27.5% | 1.34 | 14.2% |
| Commodities (DBC) | 17.7% | 17.5% | 0.84 | 25.1% |
| Real Estate (VNQ) | 1.7% | 16.4% | -0.07 | 40.8% |
| Bitcoin (BTCUSD) | -18.7% | 43.9% | -0.35 | 35.4% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Based On 5-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with CAT | |
|---|---|---|---|---|
| CAT | 27.9% | 29.6% | 0.86 | - |
| Sector ETF (XLI) | 12.5% | 17.2% | 0.57 | 73.0% |
| Equity (SPY) | 12.0% | 17.0% | 0.55 | 57.5% |
| Gold (GLD) | 19.8% | 17.6% | 0.92 | 12.5% |
| Commodities (DBC) | 11.6% | 18.9% | 0.50 | 32.6% |
| Real Estate (VNQ) | 3.4% | 18.8% | 0.09 | 39.8% |
| Bitcoin (BTCUSD) | 4.1% | 56.7% | 0.29 | 23.0% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Based On 10-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with CAT | |
|---|---|---|---|---|
| CAT | 27.9% | 30.4% | 0.87 | - |
| Sector ETF (XLI) | 13.3% | 19.8% | 0.59 | 76.3% |
| Equity (SPY) | 14.0% | 17.9% | 0.67 | 63.9% |
| Gold (GLD) | 12.9% | 15.8% | 0.67 | 4.0% |
| Commodities (DBC) | 8.2% | 17.6% | 0.39 | 36.6% |
| Real Estate (VNQ) | 4.7% | 20.7% | 0.19 | 43.5% |
| Bitcoin (BTCUSD) | 67.1% | 66.8% | 1.06 | 15.6% |
Smart multi-asset allocation framework can stack odds in your favor. Learn How
Returns Analyses
Earnings Returns History
Expand for More| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 1/29/2026 | 3.4% | 7.5% | 15.5% |
| 10/29/2025 | 11.6% | 4.4% | 9.4% |
| 8/5/2025 | 0.1% | -5.8% | -4.3% |
| 4/30/2025 | 0.6% | 4.4% | 14.4% |
| 1/30/2025 | -4.6% | -8.7% | -12.5% |
| 10/30/2024 | -2.1% | -1.1% | 4.2% |
| 8/6/2024 | 3.0% | 6.1% | 6.3% |
| 4/25/2024 | -7.0% | -8.9% | -3.5% |
| ... | |||
| SUMMARY STATS | |||
| # Positive | 10 | 12 | 16 |
| # Negative | 14 | 12 | 8 |
| Median Positive | 3.2% | 4.2% | 6.1% |
| Median Negative | -3.0% | -4.2% | -4.2% |
| Max Positive | 11.6% | 8.9% | 19.7% |
| Max Negative | -7.0% | -8.9% | -12.5% |
SEC Filings
Expand for More| Report Date | Filing Date | Filing |
|---|---|---|
| 12/31/2025 | 02/13/2026 | 10-K |
| 09/30/2025 | 11/03/2025 | 10-Q |
| 06/30/2025 | 08/06/2025 | 10-Q |
| 03/31/2025 | 05/07/2025 | 10-Q |
| 12/31/2024 | 02/14/2025 | 10-K |
| 09/30/2024 | 11/06/2024 | 10-Q |
| 06/30/2024 | 08/07/2024 | 10-Q |
| 03/31/2024 | 05/01/2024 | 10-Q |
| 12/31/2023 | 02/16/2024 | 10-K |
| 09/30/2023 | 11/01/2023 | 10-Q |
| 06/30/2023 | 08/02/2023 | 10-Q |
| 03/31/2023 | 05/03/2023 | 10-Q |
| 12/31/2022 | 02/15/2023 | 10-K |
| 09/30/2022 | 11/02/2022 | 10-Q |
| 06/30/2022 | 08/03/2022 | 10-Q |
| 03/31/2022 | 05/04/2022 | 10-Q |
Insider Activity
Expand for More| # | Owner | Title | Holding | Action | Filing Date | Price | Shares | Transacted Value | Value of Held Shares | Form |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Bonfield, Andrew R J | Chief Financial Officer | Direct | Sell | 1052026 | 575.06 | 10,000 | 5,750,589 | 26,142,178 | Form |
| 2 | Bonfield, Andrew R J | Chief Financial Officer | Direct | Sell | 12022025 | 571.44 | 10,000 | 5,714,448 | 31,692,328 | Form |
| 3 | Kaiser, Jason | Group President | Direct | Sell | 11132025 | 563.60 | 10,707 | 6,034,490 | 4,874,597 | Form |
| 4 | Fassino, Anthony D | Group President | Direct | Sell | 11122025 | 570.18 | 8,184 | 4,666,353 | 23,669,312 | Form |
| 5 | De, Lange Bob | Group President | Direct | Sell | 11072025 | 562.36 | 14,638 | 8,231,826 | 45,106,333 | Form |
CAT Trade Sentinel
OVERWEIGHT (Score 9-10)
CONVICTION RATIONALE
The probability-adjusted skew is highly attractive at >2.0x. The investment thesis is supported by an exceptionally strong leading indicator (71% backlog growth) and a structural re-rating story (AI data center demand). The primary risk (margin pressure) is known and largely priced in, while the magnitude of the new growth driver appears underestimated by conservative guidance.
STOCK ARCHETYPE
Cyclical / CommodityCaterpillar's core business is tied to capital expenditure in construction and mining, making it inherently cyclical. The data emphasizes a record backlog and a 'Super-Cycle' dynamic, which requires a cyclical lens to analyze correctly, focusing on timing and normalized earnings power rather than static TTM metrics.
INVESTMENT THESIS
Caterpillar is capturing a new, high-margin, and structurally growing revenue stream from the urgent, non-discretionary buildout of AI data centers. This secular driver, evidenced by massive new orders and accelerating segment growth, provides a powerful offset to traditional cyclicality and supports a valuation re-rating.
- The Power & Energy segment's power generation sales grew 44% year-over-year in Q4 2025, driven by AI data center demand.
- Caterpillar secured a 2-gigawatt generator order for a single data center campus, one of four such orders of at least 1 GW, demonstrating market leadership and scale.
- The company's total order backlog reached a record $51.2 billion, up 71% year-over-year, providing significant revenue visibility and de-risking near-term forecasts.
PRIMARY RISK
Persistent tariffs are structurally increasing manufacturing costs, leading to margin compression that pricing power may not fully offset. This risk was realized in the most recent quarter and is guided to continue, potentially capping profitability even as revenues grow.
- Adjusted operating profit margin narrowed to 15.6% in Q4 2025 from 18.3% in the prior year, primarily due to higher manufacturing costs driven by tariffs.
- Management has guided for 2026 adjusted operating margins to be near the bottom of the targeted range, explicitly acknowledging the ongoing impact of these costs.
- The Construction Industries segment's operating margin decreased by 470 basis points in Q4 2025, showing significant pressure in a core division.
| KPI | Threshold | Rationale |
|---|---|---|
| Order Backlog ($B) | Sequential Growth > 0% | This is the most critical leading indicator of future revenue and demand strength. Any sequential decline would signal that the cycle of orders outpacing shipments has ended. |
| Energy & Transportation Segment Revenue YoY Growth | >20% | This tracks the performance of the 'Alpha Driver'. Sustained high growth confirms the durability of the AI data center thesis. A drop below 20% would question its momentum. |
| Adjusted Operating Margin (%) | >16.0% | This KPI directly measures the impact of the 'Anti-Alpha' (tariffs/costs). The ability to defend margins despite headwinds is crucial for earnings delivery and justifying the premium valuation. |
The Backlog Bridge vs. The Margin Squeeze
BULL VIEW
Record $51B backlog and accelerating Power & Energy demand for AI data centers provides a durable bridge over any cyclical weakness, ensuring strong future revenue.
CORE TENSION
Can the massive $51B backlog and secular AI-driven Power & Energy growth offset the cyclical slowdown risks and immediate margin compression from tariffs and manufacturing costs?
PREVAILING SENTIMENT
The Neutral verdict stands as Q4 2025's 71% YoY backlog growth is directly countered by the simultaneous 270 basis point decline in adjusted operating margin.
BEAR VIEW
Adjusted operating margin fell 270 bps YoY in Q4 2025 to 15.6%. This margin squeeze from tariffs is structural and will erode profitability despite backlog strength.
| Timeline | Event & Metric To Watch |
|---|---|
Late April 2026 | Q1 2026 Earnings Call Watch: Adjusted Operating Margin vs. Q4's 15.6%. Any further compression signals a negative trend. |
Throughout 2026 | Mining Sector Capex Guidance Watch: Quarterly reports from BHP, Rio Tinto. Watch for keywords like 'capital discipline' or 'capex reduction'. |
Monthly | Global Manufacturing PMI Data Release Watch: J.P. Morgan Global Manufacturing PMI. A sustained trend below the 50.0 level signals contraction. |
During 2026 | CARB Tier 5 Emissions Proposal Watch: Company disclosures on expected R&D and compliance costs associated with new emissions standards. |
| Date | Event | Stock Impact |
|---|---|---|
2025-08-22 | Major Analyst Upgrade Details: A major Wall Street firm upgraded the stock to 'Buy' from 'Hold', citing the record backlog and underappreciated earnings power from the data center power demand. | Rose significantly by 4.25% $415.72 -> $433.40 |
2025-09-18 | 52-Week High Details: Stock reached a new 52-week high, driven by strong momentum from infrastructure spending bills and continued robust demand signals from its dealer network. | Rose significantly by 3.62% $448.32 -> $464.53 |
2025-10-29 | Q3 2025 Earnings Release Details: Reported Q3 revenue and EPS that beat expectations, driven by a 10% increase in sales. The company highlighted resilient demand and a growing backlog. [3, 7] | Surged +11.63% $523.24 -> $584.12 |
2025-12-10 | Investor Day Presentation Details: Management reiterated long-term financial targets and highlighted the growing services revenue and strong demand from the energy transition and data center construction. | Rose significantly by 3.53% $592.97 -> $613.91 |
2026-01-28 | Major Data Center Power Partnership Details: Announced a strategic alliance to provide 2 gigawatts of generator sets for the Monarch Compute Campus, a massive AI data center project, confirming a key strategic growth driver. [12, 23] | Flat (0.68%) $638.91 -> $643.28 |
2026-01-29 | Q4 2025 Earnings Release Details: Reported record revenue and EPS of $5.16, beating estimates. The key highlight was the order backlog surging 71% YoY to a record $51.2 billion, signaling strong future demand. [1, 4] | Rose significantly by 3.41% $643.28 -> $665.24 |
Position Sizing
4%-6%
NORMAL
Stock trades in an Explosive Volatility regime (3.18x S&P). While the backlog provides high visibility, the Neutral sentiment and margin pressure prevent maximum conviction. The volatility caps sizing.
Diversification Alternatives
ETN
SECTOROffers strong exposure to the high-growth data center and electrification themes with less exposure to the more cyclical mining and construction end-markets.
GATX
INDUSTRYAs a railcar lessor, GATX provides exposure to industrial cyclicality with a more stable, service-oriented revenue model compared to CAT's lumpy equipment sales.
Caterpillar is evolving from a pure-play cyclical machinery manufacturer into a more resilient industrial technology leader with a significant, high-growth power generation business driven by AI data center construction.
Filter all news through the lens of the Power & Energy segment's growth, especially in data center power solutions, as the key catalyst for a valuation re-rating beyond traditional construction and mining cycles.
Large-scale generator orders for data centers (e.g., the 2-gigawatt order from American Intelligence and Power Corp); Power & Energy segment revenue growth >+20% YoY; sustained high order backlog above $40B; margin expansion despite tariff headwinds.
Slowing orders in the Power & Energy segment; significant project cancellations in the data center space; a sharp global recession impacting construction and mining capex; market share loss to competitors like Komatsu in key product areas.
Quarterly fluctuations in construction equipment sales in a single region (e.g., a 7% decline in Asia Pacific Construction sales is offset by strong growth elsewhere); minor changes in dealer inventory levels quarter-to-quarter; short-term commodity price swings impacting mining sentiment.
Repricing Catalyst
The primary catalyst is the accelerating demand for power generation equipment for AI and cloud computing data centers. This is evidenced by a record $51 billion company-wide backlog, with the Power & Energy segment seeing a 44% YoY increase in power generation sales in Q4 2025 and securing massive orders, including a 2-gigawatt generator set order for a single data center campus. This provides a new, high-margin, secular growth driver that decouples a portion of Caterpillar's business from its traditional economic cyclicality.
Power & Energy Equipment
$37.6B TTM (49% of Total) · 19.6% MarginWhat It Is
Reciprocating engines, gas turbines (under Solar Turbines brand), diesel-electric locomotives, and related parts for power generation (especially for data centers), oil and gas, marine, and rail applications.
Who Pays & How
Hyperscale data center operators (e.g., American Intelligence and Power Corp), oil & gas companies, and rail operators pay for reliable primary and backup power solutions critical to their operations. The brand's reputation for reliability and the extensive service network create significant lock-in.
Competition
Construction Industries Equipment
$27.6B TTM (36% of Total) · 14.9% MarginWhat It Is
Asphalt pavers, backhoe loaders, compactors, dozers, excavators, motor graders, pipelayers, telehandlers, and wheel loaders.
Who Pays & How
Construction contractors, rental companies, and government bodies pay for durable, high-performance machinery with high resale value and unparalleled parts/service availability through the global dealer network, which minimizes costly downtime.
Competition
Resource Industries (Mining)
$13.4B TTM (18% of Total) · 10.7% MarginWhat It Is
Large mining trucks (e.g., 797F), electric rope shovels, hydraulic mining shovels, draglines, highwall miners, and autonomous haulage systems.
Who Pays & How
Global mining giants (e.g., BHP, Rio Tinto) pay millions per truck for equipment that is critical to their extraction operations. Reliability, parts availability, and increasingly, autonomous operation capabilities are key purchasing drivers to ensure maximum mine uptime and efficiency.
Competition
External Quote Links
| Y Finance | Barrons |
| TradingView | Morningstar |
| SeekingAlpha | ValueLine |
| Motley Fool | Robinhood |
| CNBC | Etrade |
| MarketWatch | Unusual Whales |
| YCharts | Perplexity Finance |
| FinViz |
Prefer one of these to Trefis? Tell us why.