Caterpillar Inc. (CAT) — Fundamental Analysis & Key Financial Ratios

Kaplio's reading: Caterpillar Inc.

Updated on October 30, 2026 · accounts published on October 29, 2026

A highly profitable industrial business that turns its earnings into cash

Caterpillar trades at a P/E of 27.8× over the last 12 months, 57 % above its ten-year median, with an 18.3 % operating margin.

• Is Caterpillar expensive or cheap? Caterpillar's P/E is 57 % above its ten-year median and higher than in 88 % of the last decade.
• How is the business doing? Operating margin reached 18.3 % over the last 12 months, well above the 12.6 % average of fiscal 2014-2025.
• How strong is the balance sheet? Net debt was 2.2× EBITDA in fiscal 2025, under the 3.0× industrial ceiling, and the dividend has risen 11 years running.
• What to expect from the next earnings? Analysts expect EPS of $7.01 in the report due February 4, 2027, after a $7.20 beat on October 29, 2026.
• Does Caterpillar turn its margin into cash, and at what multiple of the cycle does it trade? Free cash flow was 116 % of net income in fiscal 2025, above the 85 % bar, but the P/E of 27.8× tops its 19.3× decade average.

Is Caterpillar expensive or cheap?

Over the last 12 months Caterpillar trades at a P/E of 27.8×, 57 % above its ten-year median of 17.7×. It has traded lower than this in 88 % of the past decade, a range that ran from 8.8× to 42.9×. Against its sector the gap is smaller: the median industrial trades at 25.8×, so Caterpillar carries an 8 % premium. EV/EBITDA of 16.5× also sits above its seven-year average of 14.3×, and a free cash flow yield of 2.6 % is thin. The shares are 39 % below their 52-week high of $1,064.90 but still up 11 % over 12 months, so the fall has not brought the multiple back to its history.

How is the business doing?

Caterpillar's profitability sits near the top of its own history. The operating margin of 18.3 % over the last 12 months beats both fiscal 2025 (16.6 %) and the 12.6 % average of fiscal 2014-2025. ROIC of 15.5 % is 6.4 points above the sector median of 9.1 %, though it cleared 10 % in only 5 of the last 10 fiscal years, with a low of −0.8 % in 2016. The recent trend is mixed: revenue grew 4.3 % year on year while EPS fell 14.6 % over the last 12 months, so per-share earnings are lagging sales. ROE of 42.3 % looks spectacular, but ROIC is the cleaner gauge for a company carrying debt.

How strong is the balance sheet?

Caterpillar carries real debt, but not a dangerous load. In fiscal 2025 net debt was $73.70 per share ($95.09 of debt less $21.39 of cash), about 11 % of the current share price and 2.2× EBITDA, below the 3.0× that marks a healthy industrial. The Altman Z-score of 4.3 over the last 12 months sits in the safe zone above 2.99, and a current ratio of 1.42 covers short-term obligations. The Piotroski score is 6 of 9, one point short of high quality. Shareholders get a 1.0 % dividend yield, raised for 11 consecutive fiscal years through 2025 and absorbing only 31 % of earnings.

What to expect from the next earnings?

Caterpillar has a solid record against estimates, beating EPS forecasts in 6 of the last 8 quarters. On October 29, 2026 it reported EPS of $7.20 against $7.06 expected, a 2.0 % beat. Expectations are edging up: over the last 30 days the 2026 EPS consensus rose 0.6 %, from $27.25 to $27.42 across 18 analysts, and the revenue consensus rose 0.5 %. Of 56 analysts, 31 recommend buying, 21 holding and 4 selling. The next report, on February 4, 2027, carries an EPS estimate of $7.01, slightly below the quarter just reported.

Does Caterpillar turn its margin into cash, and at what multiple of the cycle does it trade?

Industrials are semi-cyclical: order books, operating margin and cash conversion decide how a company gets through a downturn, so profits that do not become cash count for little. Caterpillar passes that test. Free cash flow was 116 % of net income in fiscal 2025, against a healthy floor of 85 %, and revenue per share grew 13.6 % a year over fiscal 2020-2025, above the 6 % bar. Capex was only 2.2 % of revenue, below the 4 % to 8 % range, which helps today's cash conversion. On the cycle, the P/E of 27.8× sits above its ten-year average of 19.3× and EV/EBITDA of 16.5× above its seven-year 14.3×, both past the line that marks expensive.

How this was prepared: the data comes from companies' official filings, collected by a professional provider, and from Kaplio's analysis engine (trailing-12-month ratios, 10 years of history and sector medians computed across US-listed companies). The text is written from that data alone, every figure is checked against it before publication, and it is reviewed when the company reports results. This is not investment advice.