Key Stats for Caterpillar Stock
- Current Price: $622.75
- Target Price (Mid): ~$990
- Street Target: ~$920
- Potential Total Return: ~59%
- Annualized IRR: ~12% / year
What Happened?
Caterpillar (CAT) fell 12.70% across October 29 and 30 after reporting a record $78 billion backlog, up from $72 billion at the end of June. Shares fell 9.25% on October 29 after Caterpillar held its full-year outlook and guided to only moderate fourth-quarter growth. They fell another 3.81% to $622.75 on October 30 as at least three firms cut price targets. One was Truist, whose analyst Jamie Cook had asked Chairman and CEO Joe Creed on the call when margins would recover.
A Margin Target That Moves Up as Sales Grow
Caterpillar ties its margin goal to sales. Its 2025 investor day set an adjusted operating margin target of 15% to 19% at $60 billion of revenue, rising to 21% to 25% at $100 billion. Third-quarter adjusted operating margin was 20.6%, including $128 million of tariff refunds. Excluding refunds, management expects the full-year margin to land near the bottom of the range.
Creed told Cook that “it’s a progressive target. So as our margins are going up, the target continues to increase, so we’re kind of skipping along the bottom.” He added that “over the next couple of years, we want to try to work our way back to the midpoint.”
CFO Kyle Epley tied this year’s margin to about $2.2 billion of tariff costs excluding refunds, higher freight, and depreciation from new capacity. He expects freight and capacity costs to stay higher in the fourth quarter.
Targets Fell While 2027 Estimates Held
The cuts:
- Morgan Stanley: $915 to $675, Equal Weight (October 30), about 8% above the close
- Citi: $950 to $800, Buy (October 30)
- Truist: $1,100 to $1,027, Buy (October 30)
- RBC Capital: $897 to $722, Sector Perform
Cummins, which also sells data center generators, fell more than 3% on October 30, while Deere rose 2.35%.
The 2027 numbers barely moved. TIKR’s consensus for Caterpillar’s 2027 revenue rose 0.40% between September 30 and October 31, to around $88.4 billion from 17 analysts. The stock now trades at about 21 times forward earnings. TIKR’s mean target of around $918 sits about 47% above the close, though not every October 30 cut may be reflected yet.
TIKR tracks 29 analysts on Caterpillar. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Caterpillar, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Caterpillar’s Analyst Ratings
TIKR Advanced Model Analysis
- Current Price: $622.75
- Target Price (Mid): ~$990
- Potential Total Return: ~59%
- Annualized IRR: ~12% / year
The TIKR model’s mid case puts Caterpillar at around $990 by December 31, 2030, about 59% above the $622.75 close, or about 12% a year. Its annual assumptions:
- Revenue growth: about 7.5%, below the roughly 11% a year in TIKR’s 2025 to 2030 consensus
- Net margin: near 17%, versus 16.5% over the past year
- Valuation: a P/E that shrinks about 3% a year
That case needs only modest margin progress, which fits Creed’s timeline. Upside comes if margins reach the midpoint sooner. Downside comes if tariffs and capacity costs hold margins at the bottom while the multiple keeps falling.
Conclusion
Caterpillar plans to discuss 2027 in January. The test is its 2027 adjusted operating margin outlook excluding tariff refunds. A guide that moves off the bottom of the range would put Creed’s couple-of-years timeline on track. Another year “near the bottom” would leave the multiple, not earnings, driving the stock.
So what is Caterpillar stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
