Caterpillar Inc. (CAT), headquartered in Irving, Texas, stands as a dominant player in the manufacturing of construction and mining equipment, as well as off-highway diesel and natural gas engines. With a market capitalization of $185.4 billion, the company is recognized globally for its machinery, engines, and the financing and insurance services it provides.
Strong Stock Performance Outpaces the Market
Over the past year, Caterpillar’s shares have outperformed the broader market slightly. The stock climbed 53%, while the S&P 500 Index ($SPX) rose nearly 30.4% during the same period. In 2024 alone, CAT’s stock increased by 29.9%, outpacing the SPX’s 23.1% gain year-to-date.
CAT vs. Industrial Sector ETFs
Focusing further, CAT has also surpassed the Industrial Select Sector SPDR Fund (XLI), which has seen a growth of about 32.6% in the last year. On a year-to-date basis, the gains for CAT continue to outshine the ETF’s 22% returns.
Impact of Recent Earnings Report
On October 30, CAT shares fell by 2.1% following the release of its Q3 earnings, which missed both EPS and revenue estimates due to reduced sales volume. This disappointing performance led to a decline in stock prices.
Analysts Adjust Expectations
For the current fiscal year, ending in December, analysts project CAT’s EPS to grow by 2.2%, reaching $21.68 on a diluted basis. The company’s earnings history shows a mixed record; it exceeded expectations in three of the last four quarters but missed one time.
Among the 18 analysts tracking CAT stock, the current consensus rating is a “Hold,” which is a downgrade from “Moderate Buy” seen a month ago. This rating is based on seven “Strong Buy” recommendations, one “Moderate Buy,” eight “Holds,” and four “Strong Sells.”
Future Outlook with Price Target Adjustments
On November 13, Evercore Inc. (EVR) downgraded Caterpillar from ‘In Line’ to ‘Underperform,’ while raising its price target from $321 to $365. This adjustment reflects concerns over potential earnings risks and competitive challenges. Evercore pointed to CAT’s Q3 sales and earnings as indicators of possible downward EPS risks for 2025, driven by high inventory levels in construction equipment. Moreover, they noted that increased global competition, intensified by a strong U.S. dollar, could affect sales in both construction and mining equipment.
Currently, CAT trades above the average price target of $381.83. However, the highest price target of $500 suggests a potential upside of 30.2% from current market prices.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is provided for informational purposes only. For more details, please refer to the Barchart Disclosure Policy here.
The opinions expressed herein are solely those of the author and do not necessarily reflect the views of Nasdaq, Inc.
