Introduction
Caterpillar is a global leader in construction and mining equipment. Founded in 1925 and headquartered in Texas, Caterpillar operates in more than 190 countries and is widely recognized for its iconic yellow machinery. There are several reasons why purchasing Caterpillar stock right now could be a smart investment decision, including its strong market position, global infrastructure demand, financial stability, and commitment to innovation.
Quarter 4 Earnings
aterpillar reported quarterly revenues of $19.1B (+18% YoY) and closed the year at $67.6B (+4% YoY). Service revenues for the year were $24B. However, the company’s operating profit margin was 13.9%, while a year ago it was 18%. As a result, Caterpillar’s EPS declined from $5.78 to $5.12. Enterprise-level operating cash flow was $11.7B for the full year. Even though Caterpillar’s EPS was down YoY, the company beat expectations, reporting an earnings surprise that is quite meaningful: $0.45 above the consensus average of $4.71, representing a surprise close to 10%.
Valuation
Here comes the tricky part. The risk of FOMO is right around the corner, which is even stronger for me, since I have been covering this stock since it was trading below $200 and have never bought it. Right now, however, the stock trades at a fwd PE close to 35, and a fwd EV/EBITDA of 25. As much as I like Caterpillar and as much as I like the numbers it is reporting, I see a lot of optimism baked in. This is not without reason, as I have tried to show you. But I think that it is hard to find a margin of safety right now, as the stock is reflecting strong expectations, which pushed its fwd PEG ratio to 5.6. The dividend yield, which once used to be above 2%, is now 0.92%, positioning Caterpillar’s multiples and key valuation metrics at par with the best of Big Tech. I have to congratulate all those who bought Caterpillar’s shares because their investment is generating huge returns.
Conclusion
In conclusion, Catepillar performing exceptionally well in early 2026, driven by record demand for its power generation equipment to support AI data centers, boosted by the Quarter 4 earnings and the valuation. So for me its a buy.
Dacutecat Finance 