CATERPILLAR INC (CAT) Stock Analysis
CATERPILLAR INC (CAT) Stock Analysis
Analysis from 10-Q filed 2025-11-03. Data as of Q4 2025.
Overall Grade: F (Concerning)
CATERPILLAR INC faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 26.1% | Above industry average |
| FCF Margin | 13.2% | Healthy cash flow |
Investment Thesis: Strong return on invested capital of 26.1% suggests durable competitive advantages and efficient capital allocation.
Explore CATERPILLAR INC: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: CATERPILLAR INC earns 26.1% ROIC, Top 5% in Industrials
CATERPILLAR INC's trailing-twelve-month ROIC of 26.1% ranks Top 5% in Industrials companies (sector median: 7.3%), driven by NOPAT margin of 12.5% combined with asset turnover of 0.7x. Source: 10-Q filed 2025-11-03. Gross margin of 47.0% with operating margin at 16.5% reflects strong pricing power.
| Metric | CAT | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 26.1% | Excellent | Above sector median of 7.3% |
| Gross Margin | 47.0% | Good | Strong pricing power |
| Operating Margin | 16.5% | Good | Efficient operations |
Cash Flow: CATERPILLAR INC generates $8.9B FCF at 13.2% margin, positive NaN/8 quarters
CATERPILLAR INC generated $8.9B in free cash flow (TTM), a 13.2% FCF margin, a margin that ranks Top 25% in Industrials. Operating cash flow exceeds net income by 1.3x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-11-03.
| Metric | CAT | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 13.2% | Good | Healthy cash generation |
| Free Cash Flow (TTM) | $8.9B | Good | Positive cash generation |
| OCF/Net Income | 1.3x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet Analysis for CATERPILLAR INC
Total debt of $36.2B offset by $10.0B in cash. Source: 10-Q filed 2025-11-03.
| Metric | CAT | Rating | Context |
|---|---|---|---|
| Net Cash Position | $-26.2B | Warning | Net debt position |
Valuation: CATERPILLAR INC trades at 30.3x earnings
CATERPILLAR INC trades at a P/E of 30.3x. Free cash flow yield of 3.3% reflects market expectations for growth.
| Metric | CAT | Rating | Context |
|---|---|---|---|
| P/E Ratio | 30.3x | Adequate | Premium valuation |
| EV/Sales | 4.1x | Good | Growth premium priced in |
| FCF Yield | 3.3% | Adequate | Lower cash yield |
| Dividend Yield | 1.0% | Adequate | Growth focus over income |
Capital Allocation: CATERPILLAR INC returns 2.9% shareholder yield
CATERPILLAR INC's total shareholder yield is 2.9% (dividends 1.0% + buybacks 1.9%). Source: 10-Q filed 2025-11-03.
| Metric | CAT | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 2.9% | Adequate | Dividend + buyback yield combined |
| Buyback Yield | 1.9% | Adequate | Minimal buyback activity |
| Total Capital Returned (TTM) | $7.9B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 26.1% | Top 5% | 3.6x above |
| Free Cash Flow Margin | 13.2% | Top 25% | 2.8x above |
| Gross Margin | 47.0% | Top 25% | 1.4x above |
| Operating Margin | 16.5% | Top 25% | 2.2x above |
| P/E Ratio | 30.3x | N/A | - |
Financial Scorecard
| Metric | CAT | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 26.1% | Excellent | Top 5% of sector (median: 7.3%) |
| Free Cash Flow Margin | 13.2% | Good | Top 25% of sector (median: 4.7%) |
| Gross Margin | 47.0% | Good | Top 25% of sector (median: 33.1%) |
| P/E Ratio (Price-to-Earnings) | 30.3x | Adequate | Growth premium |
| Free Cash Flow Yield | 3.3% | Adequate | Moderate yield |
Frequently Asked Questions
Q: What is CATERPILLAR INC's Return on Invested Capital (ROIC)?
CATERPILLAR INC (CAT) has a trailing twelve-month Return on Invested Capital (ROIC) of 26.1%. This compares above the sector median of 7.3%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is CATERPILLAR INC's Free Cash Flow Margin?
CATERPILLAR INC (CAT) has a free cash flow margin of 13.2%, generating $8.9 billion in free cash flow over the trailing twelve months. A FCF margin between 10-20% represents healthy cash generation for most industries.
Q: Is CATERPILLAR INC stock overvalued or undervalued?
CATERPILLAR INC (CAT) trades at a P/E ratio of 30.3x, which is above the sector median of N/A. The EV/Sales multiple is 4.1x. Free cash flow yield is 3.3%, which is in line with market averages.
Q: Does CATERPILLAR INC pay a dividend?
CATERPILLAR INC (CAT) currently pays a dividend yield of 1.0%. Including share buybacks, the total shareholder yield is 2.9%. The relatively low yield suggests the company prioritizes growth reinvestment over income distribution.
Q: What is CATERPILLAR INC's revenue and earnings growth?
CATERPILLAR INC (CAT) grew revenue by 4.3% year-over-year. Earnings per share decreased by 14.7% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: Is CATERPILLAR INC buying back stock?
CATERPILLAR INC (CAT) repurchased $5.2 billion of stock over the trailing twelve months. This represents a buyback yield of 1.9%.
Q: How does CATERPILLAR INC compare to competitors in Industrials?
Compared to other companies in Industrials, CATERPILLAR INC (CAT) shows: ROIC of 26.1% is above the sector median of 7.3% (Top 2%). FCF margin of 13.2% exceeds the sector median of 4.7% (Top 19% of sector). Gross margin at 47.0% is 13.9 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Industrials companies with available SEC filings.
Q: What warning signs should I watch for with CATERPILLAR INC?
Investors in CATERPILLAR INC (CAT) should monitor these potential warning signs: 1) ROIC has been declining, potentially signaling deteriorating competitive position. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-11-03. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.