Longtime Caterpillar(NYSE: CAT) Shareholders who have never wondered what it is like is to drive one of the company's leading steel bulls, probably a similar experience through the gains of the stock moving from the ground of 186% during the five years Last. Despite a volatile -eco -economic environment, the industrial giant has achieved highest ever gains through its diverse world footprint and its striking strategic execution.
On the other hand, the stock has hit a mound in the road and is currently under pressure, down about 16% of its highest 52 weeks in the middle of some quiet sales guide for 2025. Is the This sale represents a new purchase opportunity to capture up shares, or is it a sign to dump the stock before the Earth caves in?
Let's discuss what to do with Caterpillar's shares.
Caterpillar is recognized as the world's leading construction and mining equipment manufacturer, famous for its iconic yellow heavy duty machines. The company's products, including excavators, huge trucks, specialized machinery, and industrial power systems, are considered essential in many industries and have a well -deserved reputation for durability.
A long history of innovation has continued with a major effort to integrate more high-tech features and digital connectivity across its lineup. The strategy to introduce more autonomous options, electric powertrains, and even artificial intelligence (AI) capabilities has helped diversify the business.
The impact was evident in 2024 when action helped financial efficiency to support margins to push full year adjusted earnings per share (EPS) up 3% to $ 21.90, indicating a company record. This was achieved even as total revenue slipped 5% compared to 2023 balancing a weakness in demand from China, alongside mixed trends in North American construction that still deals with high interest rates.
Image source: Getty images.
The forecasts for 2025 remain sluggish, with management guiding for another small decline in full -year sales. According to Wall Street analysts tracked by Yahoo! Finance, 2025 EPS is forecast to decrease 6.5% to $ 20.47.
Nevertheless, the larger takeaway is a sense of general basic stability. Caterpillar still produces billions in free cash flow, with managers projecting optimism in its ability to return to profitable growth over time.
Investors who are confident that existing headgears simply hit in the way enough reasons to stick to a caterpillar as blue chip stock for the long term. A scenario where macroeconomic conditions might strengthen that the catalyst needed for the company to outperform expectations and send the stock to a new highlight ever.
Metric
2024
2025 Estimated
Revenue (in billions)
$ 64.8
$ 63.5
Revenue Growth (YOY)
(3.4%)
(2%)
Customized earnings per share (EPS)
$ 21.90
$ 20.47
Customized EPS Growth (YOY)
3.3%
(6.5%)
Data Source: Yahoo Finance. Yoy = year after year.
Investors usually look to buy stocks that present that improving prospects. In this case, the latest Caterpillar update left a lot to wish, at a time when the market is facing a new round of uncertainty.
Although details have not been confirmed, it was proposed tariff By the Trump Ministry on steel and aluminum has the potential to disturb the Caterpillar manufacturing supply chain, mentioned during the fourth -quarter earnings conference call as the company is closely watching. The after -effects could extend to the wider business environment if customer demand slows down in response to an increasing trade war.
This is all against a backdrop of Caterpillar's valuation. Caterpillar's shares trade at a price-to-ears ratio (P/E) onwards of 17 times its consensus EPS 2025, a level equivalent to the five-year average for the multiplication multiples, covering a period with stronger growth. One interpretation is that the stock could be overvalued with a further place to fall.
Investors are concerned that Caterpillar could struggle for an extended period as his prospects decline that he could consider selling the stock or at least avoiding it.
There is much to like about Caterpillar as an industrial sector leader who has proven himself more than capable of navigating various market cycles.
That said, I don't see enough good news to jump in and buy the stock confidently for a rebound anytime soon. Current shareholders can probably continue to hold the stock and look forward to the next few quarterly updates for signs of stronger trends. In the meantime, investors sitting on the sideline may find better opportunities elsewhere in the stock market right now.
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And Victor He does not have a position in any of the stocks mentioned. The Motley Fool has no point of view in any of the stocks mentioned. The fool has motley and Disclosure Policy.
