Key Stats for Caterpillar Stock
- Current Price: $704.05
- Target Price (Mid): ~$1,100
- Street Target: ~$946
- Potential Total Return: ~57%
- Annualized IRR: ~11% / year
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What Happened?
Caterpillar (CAT) fell 4.89% to $704.05 on October 22. Reports tied the drop mainly to sector-wide selling rather than a Caterpillar announcement. CNBC reported that GE Vernova (GEV) was the S&P 500’s third-worst performer that day, amid concerns about how long the data center buildout lasts. Other reports pointed to macro worries and selling ahead of earnings.
The close left Caterpillar 33.89% below its June 30 closing peak, and shares traded lower again on October 23. Caterpillar reports third-quarter results before the open on October 29.
The Drop Lifted the TIKR Model’s Expected Return to About 11%
When TIKR ran its valuation model on Caterpillar on October 2, at $826.35, the mid case implied about 6% a year through December 31, 2030. At the October 22 close, it implies about 11% a year.
Most of that change comes from the lower price. The mid-case target also rose, to around $1,100 from around $1,060.
Wall Street has trimmed its targets but not turned on the stock. Four firms cut price targets in October without a downgrade, as TIKR reported on October 22. The mean target of around $946 still sits about 34% above the October 22 close.
Power Sales Will Show What the Plants Could Ship
On a September 10 call with Wells Fargo’s Jerry Revich, Chairman and CEO Joseph Creed said large-engine capacity additions were running “slightly ahead, 2 or 3 months,” while turbine additions were “on plan.” He also described how little margin for error the operation has: “we’re hand to mouth every day,” he said, adding that “there’s not a lot of slack in the system.”
Creed said Power & Energy is capacity constrained, unlike most construction and mining products. Power generation sales rose 29% in the second quarter. Their third-quarter pace will largely reflect what Caterpillar could build and ship, and Creed said a machine going down in a factory can cause bumps. Customer schedule changes can still move deliveries, but a slowdown in data center demand would show up more clearly in orders and backlog.
Creed also said the restarted 10-megawatt engine should start shipping “hopefully later this year.”
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: $704.05
- Target Price (Mid): ~$1,100
- Potential Total Return: ~57%
- Annualized IRR: ~11% / year
The mid case, the model’s central scenario, targets around $1,100 by December 31, 2030. That is a ~57% total return from $704.05, or about 11% a year over 4.2 years.
The main risk is execution: with little slack, a delayed capacity ramp would push revenue into later periods. The upside comes if capacity keeps running ahead of plan. On the downside, the Street’s lowest target of $575 sits about 18% below the October 22 close.
Conclusion
Consensus calls for around $20.7 billion in third-quarter revenue, up about 17%, and adjusted EPS around $7. Caterpillar has topped revenue estimates five quarters running, so two other numbers matter more on October 29:
- Backlog, which shows whether orders kept pace with shipments. Slower power sales together with a lower backlog would point to softer demand rather than capacity limits.
- Power generation sales growth, compared with 29% in the second quarter. A pace near that would show the plants keeping up.
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!
