Caterpillar’s fourth quarter results drew a positive response from the market, as the company reported better-than-expected revenue and adjusted earnings per share. Management credited robust volume growth across its main business segments, particularly in power and energy, for the strong performance. CEO Joe Creed highlighted record sales in power generation and oil and gas, with demand for large generators and turbines tied to data center expansion as a key factor. Management also noted that backlog reached an all-time high, driven by strong ordering activity across construction, resource, and energy markets.
Is now the time to buy CAT? Find out in our full research report (it’s free for active Edge members).
Caterpillar (CAT) Q4 CY2025 Highlights:
- Revenue: $19.13 billion vs analyst estimates of $17.75 billion (18% year-on-year growth, 7.8% beat)
- Adjusted EPS: $5.16 vs analyst estimates of $4.71 (9.5% beat)
- Adjusted EBITDA: $3.26 billion vs analyst estimates of $3.40 billion (17% margin, 4.1% miss)
- Operating Margin: 13.9%, down from 18% in the same quarter last year
- Organic Revenue rose 16.9% year on year (beat)
- Market Capitalization: $323.8 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Caterpillar’s Q4 Earnings Call
- Mig Dobre (Baird) asked about the sustainability of order and backlog growth across all segments and how pricing will keep pace with cost and tariff volatility. CEO Joe Creed explained that most customer contracts include inflation escalators and that backlog visibility, particularly in power and energy, is being managed through close customer collaboration.
- Michael Feniger (Bank of America) questioned the risk of overcapacity as data center-related demand drives capacity expansion. Creed reassured that capacity planning considers all end markets, not just data centers, and includes service and component needs to support future overhaul cycles.
- David Raso (Evercore ISI) sought clarity on why sales growth guidance appears modest despite the strong near-term backlog. CFO Andrew Bonfield noted that sales guidance factors in current capacity limits and a return to more typical dealer inventory patterns, rather than just order momentum.
- Tammy Zakaria (JPMorgan) inquired about the revenue mix and capacity for battery energy storage systems (BESS) in large power orders. Creed clarified that the majority of recent large orders are for gas generator sets, with BESS forming a small portion, and confirmed capacity planning includes provisions for BESS growth.
- Kristen Owen (Oppenheimer) asked about the drivers of construction demand, including the impact of data center activity and normalized replacement trends. Creed indicated that North America remains strong, with infrastructure spending and data center construction supporting growth, while market share gains are expected to continue.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will focus on (1) the pace at which Caterpillar can expand production capacity to meet growing demand, especially in power and energy; (2) the company’s ability to mitigate rising tariff and cost pressures through operational efficiencies and pricing; and (3) progress in scaling digital and service revenue streams. Execution on strategic investments and backlog conversion will be important indicators for sustained outperformance.
Caterpillar currently trades at $693.90, up from $643.28 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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