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Irving, Texas-based Caterpillar Inc. (CAT) manufactures and sells construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. Valued at a market cap of $164.4 billion, the company also offers wear and maintenance components, parts distribution, logistics solutions and distribution services, dealer portfolio management, and marketing strategy services.
Companies worth $10 billion or more are generally described as “large-cap” stocks and Caterpillar fits right into that category with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the farm & heavy construction machinery industry. The company is one of the world's leading manufacturers of construction and mining equipment and is known for its safety and quality standards.
Despite its notable strength, this machinery giant has dropped 17.8% from its 52-week high of $418.50, reached on Nov. 7, 2024. Moreover, it has declined 14.8% over the past three months, massively lagging behind the Nasdaq Composite’s ($NASX) 1.1% fall over the same time frame.
Moreover, in the longer term, CAT has gained 4.4% over the past 52 weeks, underperforming NASX’s 18.2% return. On a YTD basis, shares of CAT are down 5.2%, compared to NASX’s 2.4% dip over the same time frame.
To confirm its recent bearish trend, CAT has been trading below its 200-day moving average since early February, and is trading below its 50-day moving average since late January.
On Feb. 3, shares of Caterpillar plunged 2.7% due to concerns around new tariffs on goods from Canada, Mexico, and China.
Moreover, on Jan. 30, CAT’s shares closed down 4.6% as the company delivered a mixed Q4 performance. Its adjusted earnings of $5.14 per share declined 1.7% from the year-ago quarter but topped the Wall Street estimates by 3.4%. However, the company reported a 5.3% year-over-year fall in revenues to $16.2 billion, which missed the forecasted figure by 2.5%. An overall decline in volumes and unfavorable price realization adversely affected the results.
CAT has outpaced its rival, Komatsu Ltd.’s (KMTUY) 2.9% gain over the past 52 weeks but has lagged behind Komatsu’s 9.6% rise on a YTD basis.
Although Caterpillar has underperformed relative to the Nasdaq recently, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 21 analysts covering it, and the mean price target of $397.53 suggests a 15.6% premium to its current levels.
