Caterpillar Inc. (CAT) Stock Analysis
Score ACyclical · Grade B · Bullish
$864.94
$790.33
-8.6%
7/10
B
Cyclical
Investment Thesis
Good opportunity: Solid company with good risk/reward at 1.7:1.
For New Investors
Quantitative score: high
For Current Holders
Quantitative score: neutral
Buy if
- Price drops 15-20% (improves asymmetry)
- Bull scenario catalysts materialize
- Market-wide correction creates opportunity
Sell if
- Bear scenario triggers occur
- Quality metrics deteriorate (ROIC declining)
- Better alternatives emerge
Valuation
Fair Value estimate: $790.33 (-8.6%). Approximately at fair value. (Methods diverge significantly. Conservative estimate shown.)
PEG-Based EPS
$829.37
FCF DCF Model
$923.39
EV/EBITDA
$181.62
Blended Fair Value
$790.33
Confidence
Low
Methods
PEG-Based EPS (conservative), FCF 2-Stage DCF, EV/EBITDA
Quality Analysis
86/120 points
Investable
ROE (3Y Avg)
50.0%
ROIC-WACC Spread
7.1%
D/E Ratio
2.0x
Current Ratio
1.4x
Interest Coverage
11x
FCF Positive Years
3/3
Quality Flags
- ROIC spread: 7.1pp (got 18/25 pts)
- Leverage: D/E 2.0x (3/15 pts)
Market Sentiment
Wall Street Consensus
$825.00
-4.6% Upside
26 analysts
Range: $658.00 — $1,165.00
Rating: Buy
Our model aligns with Wall Street consensus.
Trend & Technical
Price ($865.07) is 40.1% above SMA 200 ($617.31). Bullish trend confirmed.
Tech Score 78/100 — Strong technical setup. Trend, momentum, and positioning aligned bullish.
Risk & Reward
Asymmetry Ratio
1.68:1
Expected Return
+9.3%
Bull Upside
+47.8%
Bear Downside
-28.5%
Moderate asymmetry: 1.68:1 ratio. Balanced risk/reward.
Verdict: Neutral
Scenario Analysis
Bear
Base
Bull
Buy Zone & Action Plan
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AI Executive Summary
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Technical Analysis
RSI, MACD, moving averages, trend signals, and momentum indicators.
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Frequently Asked Questions
What is the fair value of CAT?
Based on our multi-method conviction analysis, the estimated fair value of Caterpillar Inc. (CAT) is $790.33. This is calculated by blending PEG-Based EPS (conservative), FCF 2-Stage DCF, EV/EBITDA and applying a quality premium of 0% based on the company's fundamentals. The confidence level of this estimate is low.
Is CAT a buy, sell, or hold?
CAT currently has a BUY rating with a conviction score of 7/10. Good opportunity: Solid company with good risk/reward at 1.7:1. Quantitative score: high.
Is CAT a high-quality stock?
Caterpillar Inc. has a quality grade of B (86/120 points), rated as Investable. Key metrics include ROE of 50.0%, ROIC-WACC spread of 7.1%, and D/E ratio of 2.0x.
What type of stock is CAT?
CAT is classified as a "cyclical" in our framework. High P/E: 43.1x, Low dividend (reinvesting): 0.7%, Mature growth: 8.7%, High debt: D/E 2.0x, High beta (cyclical behavior): 1.62
What do Wall Street analysts say about CAT?
26 Wall Street analysts have a consensus price target of $825.00 for CAT, representing -4.6% upside. Targets range from $658.00 to $1,165.00. The consensus recommendation is "Buy". Our model aligns with Wall Street consensus.
What are the risks of investing in CAT?
The risk/reward asymmetry ratio for CAT is 1.68:1, rated as Neutral. Moderate asymmetry: 1.68:1 ratio. Balanced risk/reward. The expected return is +9.3%, with bull case upside of +47.8% and bear case downside of -28.5%.
What is the current trend for CAT?
CAT is in a bullish trend. Price ($865.07) is 40.1% above SMA 200 ($617.31). Bullish trend confirmed. The technical score is 78/100.
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Last updated: May 19, 2026 · Framework version 3.7
This analysis is for informational purposes only and should not be considered financial advice. Always do your own research before making investment decisions.