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Caterpillar Inc. (CAT), headquartered in Irving, Texas, is recognized worldwide for its construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. Valued at $166.4 billion by market cap, the company serves the construction, mining, forestry, farming, and other markets through its global dealer network.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and CAT definitely fits that description, reflecting its leadership in the farm and heavy construction equipment market. Supported by a global dealer network of 2,700 branches in 191 countries, Caterpillar enjoys undisputed market leadership and a strong brand reputation for quality and reliability. Additionally, the integration of Caterpillar Financial Services offers a strategic advantage, providing retail and wholesale financing that supports sales, creates a stable revenue stream, and fosters customer loyalty.
However, shares of this leading heavy equipment manufacturer have fallen 10.9% from its 52-week high of $382.01, which they hit on Apr. 8. Shares of CAT have risen 2.7% over the past three months, underperforming the broader S&P 500 Industrial Sector SPDR’s (XLI) 5.4% increase over the same time frame.
In the longer term, CAT shares rose 15.1% over the past year, and in 2024, the stock is up 18.9%. By contrast, the XLI is up 12.8% on a YTD basis and 18.2% over the past 52 weeks.
On the bright side, CAT has been trading above its 50-day moving average since early August. Also, the stock has been trading mostly above its 200-day moving average since late November 2023, indicating a bullish price trend.
On Aug. 6, CAT shares rose more than 3% after reporting its Q2 earnings results. Its adjusted EPS of $5.99 surpassed the consensus of $5.53. However, the company’s revenue of $16.7 billion missed Wall Street’s estimates of $17.8 billion.
CAT’s second-quarter earnings prompted Truist Securities to raise its price target for the stock to $399 from $390. The analyst highlighted Caterpillar's strong margin performance as a key reason for the increase.
To emphasize the CAT’s overall outperformance, it’s worth noting that its top rival, Deere & Company (DE), has underperformed significantly – not just CAT but also the broader industrial sector. DE stock has declined 7.9% in the past 52 weeks and dipped 3.6% on a YTD basis.
Analysts remain cautiously bullish about CAT’s prospects. The stock has a consensus rating of “Moderate Buy” from the 18 analysts in coverage, and the mean price target of $354.21 is a premium of 4.1% to current levels.
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 solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
