Industrials

Following CAT’s Q1 earnings release, we trim back our growth assumptions for 2025 and now assume sales of ~$62 billion vs. our previous estimate of $64 billion. We see margins following revenues lower, and now project operating margins slipping to 18% vs. being roughly flat for the full-year. Our 12-month target price has been adjusted to $350 from $390, valuing shares at 17.1x our 2025 EPS outlook, which is in line with CAT’s long-term historical multiple average. End market deceleration has been broad-based, with macro headwinds swiftly contributing to a pullback in customer spending on large machinery and equipment. Given the cyclical nature of CAT’s operations, we see challenges persisting under trade disputes. However, looking beyond a likely challenged 2025, we believe that stabilization and modest recovery from a lower base in 2026 is achievable. Despite the dampened demand environment, shares are trading 20% below their peak hit in early […]

Caterpillar reported better-than-expected quarterly earnings but the shares were falling. There just isn’t enough growth these days. Caterpillar announced Thursday fourth-quarter earnings per share of $5.14 from sales of $16.2 billion. Wall Street was looking for profit of $5.05 from sales of $15.8 billion, according to Bloomberg. A year ago, adjusted earnings per share were $5.26 and sales were $17 billion. For 2025, the maker of construction and mining equipment, expects full-year sales slightly lower than 2024. That’s roughly in line with Wall Street projections. Analysts are looking for $64.1 billion in 2025 sales. Caterpillar turned in $64.8 billion sales in 2024. Caterpillar stock was down 4.1% in premarket trading at $377.18 a share while S&P 500 and Dow Jones Industrial Average futures each were up about 0.4%. Results looked OK, but there isn’t much growth these days. Sales have fallen year over year for three consecutive quarters. Wall Street

Caterpillar’s sales in North America–the company’s biggest and usually its strongest market–sputtered in the 4Q, falling 7% from the same period in 2023. Construction equipment sales dropped 14% and mining equipment was off 23%. The company attributes the declines to shrinking inventories of equipment by its dealers and lower demand from customers. Caterpillar is guiding to slightly lower sales and profit for the entire company in 2025. Shares are off 5% at $374.35 in premarket trading.

Caterpillar Inc. (NYSE:CAT) shares are trading lower after the company reported worse-than-expected fourth-quarter 2024 results. Total sales and revenue for the quarter declined 5% year-over-year to $16.215 billion, missing the consensus of $16.411 billion. CAT’s adjusted earnings were $5.14 per share, compared to $5.23 a year ago and above the consensus of $4.99. The sales decline was primarily driven by an $859 million drop in volume, impacted by lower dealer inventories and reduced equipment sales. Dealer inventories fell by $1.3 billion in Q4 2024, compared to a $900 million decrease in Q4 2023. Operating profit fell 7% to $2.924 billion, down $210 million, mainly due to lower sales volume. The operating profit margin was 18%, down from 18.4% a year ago. The adjusted margin fell to 18.3% from 18.9%. Enterprise operating cash flow was $12.035 billion compared to $12.885 billion a year ago. The company ended fiscal 2024 with $6.896 billion

Caterpillar generators are a hot commodity among developers of computer data centers, despite challenges in some of the machinery maker’s other business lines. Power-generation sales rose 22% last quarter, and Caterpillar is building factory capacity to produce more large engines used as backup electricity generators at data centers. “Many customers are planning orders with us over multiple years” for generators, said Chief Executive Jim Umpleby. “We could ship more if we could build more.” More broadly, for the fourth quarter: — Sales of equipment for construction and mining fell 8% and 9%, respectively, from a year earlier, while the engine and transportation business was roughly flat. — Profit totaled $2.79 billion, or $5.78 a share, up from $2.68 billion a year earlier. Revenue dropped 5% to $16.2 billion. Caterpillar forecast slightly lower first-quarter sales, as the market for construction vehicles and other equipment remains tepid. The first quarter is typically

Goldman Sachs analyst Jerry Revich, maintaining a Buy rating and $442 price forecast, expressed views on Caterpillar, Inc.’s (NYSE:CAT) mixed fourth quarter FY24 results reported today. Total sales and revenue for the quarter declined 5% year-over-year to $16.215 billion, missing the consensus of $16.411 billion, while adjusted earnings of $5.14 per share came above the consensus of $4.99. For 2025, sales are expected to decline ~1% due to unfavorable pricing, with a slight headwind in other income from lower interest income and currency effects. The analyst writes that the key discussion around the company is whether the 2025 margin outlook represents a cyclical trough following its fourth-quarter results. The results highlighted positives such as a sharp increase in destocking ($700 million) and a book-to-bill ratio of 1.08x in orders, adds the analyst. However, concerns remain over 2025 margin targets, which are approximately 200 basis points below FactSet consensus, and a fourth-quarter EBIT

Caterpillar (CAT) faces significant challenges in 2025, with Morgan Stanley lowering its Q1 and fiscal 2025 estimates due to a cautious outlook on pricing, continued dealer de-stocking, and “more modest” contributions from several business areas, with weakness in oil and gas, industrial, and transportation offsetting strength in power generation. The company is “still priced for perfection,” Morgan Stanley said in a note Friday, explaining the company’s investment thesis will likely skew negatively during 2025, even if broader construction and resource-extraction markets show signs of improvement this year. The firm lowered its Q1 and fiscal 2025 earnings estimates for Caterpillar, extending reductions into 2026. The analysts cited a more cautious outlook for pricing, expectations for continued dealer de-stocking, and “more modest” contributions from the Energy & Transportation segment, where strength in power generation is expected to be offset by weakness in oil and gas, industrial, and transportation markets. “Our view is

Caterpillar’s (CAT) risk/reward is now balanced as expectations for the company have reset lower following two straight quarterly misses in earnings before interest and taxes, UBS Securities said in a Monday note. UBS said potential downside risk exists if “pricing pressure intensifies in 1H25 and/or oil & gas steps down more,” UBS said. “But we see equal risk that business is better than we think in 2H25/2026.” The investment firm said it cut its diluted earnings per share estimates for Caterpillar to $19.95 from $21.25 for 2025, to $21.95 from $22.25 for 2026 and to $22.85 from $23.25 for 2027. UBS upgraded the company’s rating to neutral from sell and raised its price target to $385 from $355.