Caterpillar (CAT) Margin Compression Challenges Bullish Earnings Growth Narratives

Simply Wall St.01-31 21:28

Caterpillar (CAT) just turned in its FY 2025 scorecard with fourth quarter revenue of US$19.1b and basic EPS of US$5.15, alongside net income of US$2.4b. Over recent quarters, the company has seen ...

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Over recent quarters, the company has seen ...</p>\n\n<a href=\"https://simplywall.st/stocks/us/capital-goods/nyse-cat/caterpillar/news/caterpillar-cat-margin-compression-challenges-bullish-earnin\">Source Link</a>\n\n</div>\n","source":"simplywall_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Caterpillar (CAT) Margin Compression Challenges Bullish Earnings Growth Narratives</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCaterpillar (CAT) Margin Compression Challenges Bullish Earnings Growth Narratives\n</h2>\n\n<h4 class=\"meta\">\n\n\n2026-01-31 21:28 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://simplywall.st/stocks/us/capital-goods/nyse-cat/caterpillar/news/caterpillar-cat-margin-compression-challenges-bullish-earnin><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Caterpillar (CAT) just turned in its FY 2025 scorecard with fourth quarter revenue of US$19.1b and basic EPS of US$5.15, alongside net income of US$2.4b. Over recent quarters, the company has seen ...</p>\n\n<a href=\"https://simplywall.st/stocks/us/capital-goods/nyse-cat/caterpillar/news/caterpillar-cat-margin-compression-challenges-bullish-earnin\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4585","symbol_name":"ETF&股票定投概念","start_time":0,"source_url":"https://simplywall.st/stocks/us/capital-goods/nyse-cat/caterpillar/news/caterpillar-cat-margin-compression-challenges-bullish-earnin","article_id":"2608072118","we_media_id":null,"thumbnails":["https://images.simplywall.st/asset/company-cover/259378-main-header/1756254605397"],"rights":{"source":"simplywall_highlight","url":"https://simplywall.st/stocks/us/capital-goods/nyse-cat/caterpillar/news/caterpillar-cat-margin-compression-challenges-bullish-earnin","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2608072118","pubTimestamp":1769866102,"columns":[],"sourceInfo":{"source_id":"simplywall_highlight","name":"Simply Wall St."},"weMediaInfo":null,"summary":"Caterpillar (CAT) just turned in its FY 2025 scorecard with fourth quarter revenue of US$19.1b and basic EPS of US$5.15, alongside net income of US$2.4b. 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Basic EPS shifted from US$5.09 to US$4.91 and then US$5.15 over the same stretch, setting up a results season where investors are weighing solid top line scale against a backdrop of compressed net margins and...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"BK4585":"ETF&股票定投概念","LU0742534661.SGD":"Fidelity America A-SGD (hedged)","LU1974910355.USD":"Allianz Thematica Cl AMg DIS USD","IE00BD6J9T35.USD":"NEUBERGER BERMAN NEXT GENERATION MOBILITY \"A\" (USD) ACC","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","LU0868494617.USD":"UBS (LUX) EQUITY SICAV - US TOTAL YIELD SUSTAINABLE \"P\" (USD) ACC","BK4516":"特朗普概念","LU1064131342.USD":"Fullerton Lux Funds - Global Absolute Alpha A Acc USD","LU1988902786.USD":"FULLERTON LUX FUNDS GLOBAL ABSOLUTE ALPHA \"I\" (USD) ACC","LU2237438978.USD":"Amundi Funds US Pioneer A2 (C) USD","LU0048573561.USD":"FIDELITY AMERICA \"A\" (USD) INC","LU0251142724.SGD":"Fidelity America A-SGD","BK4520":"美国基建股","BK7016":"应用软件","LU0868494708.USD":"UBS (LUX) EQUITY SICAV - US TOTAL YIELD SUSTAINABLE \"P\" (USD) INC","BK4588":"碎股","LU0251131958.USD":"FIDELITY AMERICA \"A\" (USD) ACC","BK4112":"金融交易所和数据","LU2023250504.SGD":"Allianz Thematica Cl AMg DIS H2-SGD","LU1720051108.HKD":"ALLIANZ GLOBAL ARTIFICIAL INTELLIGENCE \"AT\" (HKD) ACC","LU1917777945.USD":"安联专题基金Cl AT Acc","LU1720051017.SGD":"Allianz Global Artificial Intelligence AT Acc H2-SGD","BK4149":"建筑机械与重型卡车","LU0942090050.USD":"UBS (LUX) EQUITY SICAV - US TOTAL YIELD SUSTAINABLE \"P\" (USD)  INC","LU2357305700.SGD":"Allianz Global Artificial Intelligence ET H2-SGD","BK4597":"股息贵族","LU1548497426.USD":"安联环球人工智能AT Acc","BK4532":"文艺复兴科技持仓","BK7084":"电子设备和仪器","LU2264538146.SGD":"Fullerton Lux Funds - Global Absolute Alpha A Acc SGD","LU2106854487.HKD":"ALLIANZ THEMATICA \"AMG\" (HKD) INC","CAT":"卡特彼勒"},"translate_title":"卡特彼勒(CAT)利润率压缩挑战看涨的盈利增长叙事","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CAT":1.98},"content_text":"Caterpillar (CAT) just turned in its FY 2025 scorecard with fourth quarter revenue of US$19.1b and basic EPS of US$5.15, alongside net income of US$2.4b. Over recent quarters, the company has seen revenue move from US$16.0b in Q3 2024 to US$17.6b in Q3 2025 and then US$19.1b in Q4 2025. Basic EPS shifted from US$5.09 to US$4.91 and then US$5.15 over the same stretch, setting up a results season where investors are weighing solid top line scale against a backdrop of compressed net margins and a richer growth narrative. See our full analysis for Caterpillar. With the headline numbers on the table, the next step is to see how this earnings print lines up with the widely followed Caterpillar narratives, highlighting where the growth and margin stories are reinforced and where they get pushed back. Curious how numbers become stories that shape markets? Explore Community Narratives NYSE:CAT Earnings & Revenue History as at Jan 2026 AdvertisementTTM Net Margin Slips To 13.1%  Over the trailing 12 months, Caterpillar earned US$8.9b of net income on US$67.6b of revenue, which works out to a 13.1% net margin compared with 16.7% a year earlier. What challenges some bullish arguments about earnings quality is that trailing 12 month EPS moved from US$22.17 in 2024 Q4 to US$18.90 in 2025 Q4, even as quarterly revenue rose from US$16.2b in 2024 Q4 to US$19.1b in 2025 Q4. This suggests bulls need to account for the lower margin base when they point to longer term earnings growth.  Bulls often focus on the 5 year earnings growth rate of about 17.7% per year, yet the most recent trailing year shows lower net income of US$8.9b versus US$10.8b a year earlier. Investors who lean bullish on Caterpillar as a long term industrial name may still see the 13.1% margin as healthy, but the step down from 16.7% forms a clear reference point when comparing this period with the past few years.   Premium P/E Of 34.6x Versus Peers  The shares trade on a 34.6x P/E compared with a peer average of 25.9x and a US Machinery industry average of 27.6x, and the current share price of US$657.36 also sits above the DCF fair value of about US$590.26. Critics who take a more bearish stance point to this valuation gap, arguing that with forecast revenue growth of about 6% per year and earnings growth of about 15.8% per year, the premium to both peers and the DCF fair value leaves less room for disappointment if margins, currently at 13.1%, do not move closer to the prior 16.7% level.  The difference between the current share price of US$657.36 and the DCF fair value of US$590.26 adds roughly US$67 per share of headroom that bears view as demanding stronger profitability or cash flow to support it. Against that, investors who are less cautious may look at the 5 year earnings growth of about 17.7% per year and the forecast 15.8% earnings growth as justification for paying more than the 25.9x peer P/E, even if the most recent trailing 12 month net income of US$8.9b is below last year.   Quarterly Revenue Climbs To US$19.1b  Within FY 2025, quarterly revenue moved from US$14.2b in Q1 to US$19.1b in Q4, while quarterly net income ranged from US$2.0b to US$2.4b over the same stretch and quarterly EPS stayed in a band between US$4.22 and US$5.15. What stands out against the more optimistic narrative that treats Caterpillar as a straightforward beneficiary of long term infrastructure and industrial demand is that, although revenue across the trailing 12 months reached about US$67.6b compared with US$64.8b a year ago, the related trailing 12 month EPS moved lower from US$22.17 to US$18.90. This means investors who focus on cyclical upswings in activity also need to track how much of that higher top line actually converts into per share earnings.  The pattern of quarterly EPS in FY 2025, from US$4.22 in Q1 through US$5.15 in Q4, shows that single quarter prints can look strong even when the full year trailing EPS is below the prior 12 month period. For anyone using Caterpillar as a proxy for broader construction and mining activity, the combination of higher quarterly revenue and lower trailing 12 month EPS helps separate volume trends from overall profitability when judging how resilient the business looks across cycles.   To see how this earnings run feeds into a fuller story about growth, risks, and valuation for Caterpillar, have a look at the balanced narrative many investors are working from\n Next Steps Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Caterpillar's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move. Explore Alternatives Caterpillar is producing higher quarterly revenue, yet trailing 12 month net income, EPS, and margins are all lower than a year earlier while the P/E sits above peers. If you are uneasy paying up for that kind of stretch, use our these 868 undervalued stocks based on cash flows to quickly focus on companies where pricing looks more grounded in current earnings power.  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: AI Stock Screener & AlertsOur new AI Stock Screener scans the market every day to uncover opportunities.• Dividend Powerhouses (3%+ Yield)• Undervalued Small Caps with Insider Buying• High growth Tech and AI CompaniesOr build your own from over 50 metrics.Explore Now for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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