Caterpillar Inc.
Orin's own judgment of how firmly the evidence points one way — not the chance the price goes up.
Caterpillar's 2026 quarterly reacceleration is genuine — Q2 2026 revenue of $20.54B grew 24.0% YoY and Q1 2026 rose 22.2%, with EPS beats of 31.4% and 19.1% respectively — but the stock trades at a 34.30 P/E, a 41.6% premium to the peer median of 24.22, despite FY2025 operating margin having compressed to 16.6% from 20.2% and diluted EPS falling 14.6% to $18.83.
Technicals are deteriorating (last close $800.47 below the 50-day MA of $822.00, bearish MACD histogram of -0.449, RSI at 44.6) alongside a 24-year high in 30-year Treasury yields, and insiders remain net sellers at -$258M over 24 months. The fundamental recovery is real but the valuation already discounts it; hold for confirmation that full-year 2026 margins recover toward FY2024 levels before adding risk.
What could go wrong
- Valuation premium unsustainable. At 34.30 P/E, CAT trades 41.6% above the peer median of 24.22 and 74.2% above the peer median P/S of 2.83; any disappointment in the pace of margin recovery could trigger a de-rating.
- Rising rates pressure cyclical demand. The 30-year Treasury yield hit a 24-year high in October 2026, pressuring capital-intensive industrial demand and dealer financing costs.
- FY2025 margin compression not yet reversed. FY2025 operating margin fell to 16.6% from 20.2% in FY2024 and gross margin declined to 32.3% from 36.0%; quarterly improvement is visible but full-year confirmation is lacking.
- Insider selling persists. Over 24 months insiders net sold 365,405 shares for -$258M, with the CEO selling 12,002 shares at $812.98 on 28 Aug; no meaningful cluster buying is evident.
What would change my mind
Where this comes from: Q2 2026 results · Q1 2026 results · earnings vs estimates, 4 Aug · FY24 and FY25 fundamentals. Orin's read on CAT; not advice.
How has the share price moved?
Up 35.3% over twelve months, from $527.07 on 27 Oct 2025 to $713.31 at the Tue 27 Oct 2026 close. Its highest close in that time was $1,064.90 on 30 Jun 2026; the last close is 33.0% below it.
- Green line: the closing price each trading day.
- Grey line: the average closing price over the last 50 trading days.
- Dashed amber line: the same over the last 200 trading days — a slower, smoother line.
- Bars along the bottom: shares traded each day — green when it closed higher than the day before, rose when lower (the most, 13.9M, on 26 Jun 2026).
- Flags: the company's filings, on the day they were made (a 10-Q is the quarterly report and a 10-K the annual report; an 8-K reports a major event).
- Rose flags: large share sales by the company's own officers and directors, from the Form 4 each one files after trading.
On file
All CAT filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| BlackRock | $40.5B | 0.6% |
| State Street | $36.6B | 1.1% |
| Vanguard Capital Management | $32.0B | 0.7% |
| Vanguard Portfolio Management | $12.8B | 0.6% |
| Geode Capital Management | $11.9B | 0.6% |
| Morgan Stanley | $8.0B | 0.4% |
| JPMorgan Chase | $7.6B | 0.4% |
| Gates Foundation Trust | $6.8B | 19.7% |
| T. Rowe Price Associates | $6.6B | 0.7% |
| FMR | $6.2B | 0.3% |
185 of the 815 filers we track · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 320 Form 4 filings; open-market trades net −$258.0M. Of the 50 on hand, 0 were open-market purchases and 15 sales — the rest are grants, option exercises and tax withholding.
Ask Orin about CAT
Orin answers questions about CAT from its filings, transcripts and numbers — with the source behind every claim. Your own desk starts with 3 free days, card required.
Start 3 free days →How is it priced, against its own past and its sector?
Priced at 30.6× its last 12 months of profit (Tue 27 Oct close) — higher than in all 5 of its last 5 fiscal years (middle 17.3×); the typical Industrials company on the NYSE is at 33.7×.
| Measure | Now | Its usual | Sector |
|---|---|---|---|
| P/E | 30.6×above usual | 17.3× | 33.7× |
| P/S | 4.39×above usual | 2.25× | — |
| EV/EBITDA | 21.1×above usual | 13.0× | — |
| P/B | 16.9×above usual | 8.0× | — |
- "Its usual" is the middle of its own last 5 fiscal years.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
P/S: the company's total market value divided by one year of revenue. Used when there is no profit to measure.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
P/B: the share price divided by the book value per share — what the company owns minus what it owes, as its accounts record it. When book value is tiny, P/B swings wildly and says little.
What do the analysts who cover it publish?
The analysts' average 12-month price target is $934 (from $749 to $1,118) — 31% above the Tue 27 Oct close price. That is their published opinion, not Orin's.
$934
$749 – $1,118 · +31% against the last close
- 11 buy or overweight
- 6 hold
- 0 underweight or sell
Price target: the share price an analyst publishes for about 12 months ahead. It is the opinion of the firm that wrote it; the average is across the firms that cover the company.
Overweight / underweight: analysts' rating words: overweight means the firm expects the stock to do better than the others it covers, underweight worse. Their words, not Orin's.
How is it priced next to the companies it is compared to?
Priced at 30.6× its last 12 months of profit; the middle P/E of the 3 companies it is compared to that made a profit is 24.7×.
| Company | Market value | P/E | EV/EBITDA | Gross margin | Net margin | ROE |
|---|---|---|---|---|---|---|
| CATCaterpillar Inc. | $328B | 30.6× | 21.1× | 33.9% | 14.5% | 54% |
| DEDeere & Company | $172B | 35.5× | 19.5× | 35.7% | 10.2% | 18% |
| FSSFederal Signal Corporation | $7B | 24.7× | 15.5× | 29.2% | 11.7% | 20% |
| OSKOshkosh Corp | $8B | 15.3× | 8.5× | 15.9% | 5.2% | 12% |
- The list of companies is the data vendor's choice, so it can include a company a person would not have picked.
Market value: the share price times the number of shares — what the whole company is priced at.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
Gross margin: the share of each $1 of sales left after the direct cost of making what was sold.
Net margin: the share of each $1 of sales kept as profit after every cost. Below zero, the company lost money.
ROE: return on equity: one year of profit as a share of the shareholders' money in the business (its book value).
Is it priced high or low compared with its own past?
Priced at 30.6× its last 12 months of profit (Tue 27 Oct close). It has no full fiscal year on file since its history starts, so there is nothing of its own to compare with.
- Now30.6×
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
Fiscal year (FY): the company's own 12-month accounting year, which need not match the calendar year.
How has its sector been priced?
Industrials companies on the NYSE were priced at a typical 33.7× their yearly profit (Tue 27 Oct close).
- Now33.7×
- Each year is the middle of that calendar year's daily sector P/E; "Now" is the Tue 27 Oct close figure, the same one in the table above.
Sector P/E: the middle P/E of the companies in the same sector on the same stock exchange, as the data vendor works it out each day.
What does a cash-flow model say a share is worth?
A standard cash-flow model puts it at $173 a share — 76% below the $711.15 price it was computed against (27 Oct).
| Model | Value a share | Against the price then |
|---|---|---|
| Standard | $173 | 76% below $711.15 |
| Levered | $190 | 73% below $711.15 |
Discounted cash flow: a model's estimate of what the company is worth today, from the cash it is forecast to make in future years. Small changes in the forecast move it a lot, and it says little about a company that loses money.
Standard / levered: two versions of the cash-flow model: the standard one counts the cash before the company pays its lenders, the levered one after.