Analysts Are Updating Their Caterpillar Inc. (NYSE:CAT) Estimates After Its Yearly Results

Shareholders might have noticed that Caterpillar Inc. (NYSE:CAT) filed its full-year result this time last week. The early response was not positive, with shares down 6.0% to US$371 in the past week. The result was positive overall - although revenues of US$65b were in line with what the analysts predicted, Caterpillar surprised by delivering a statutory profit of US$22.05 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Caterpillar after the latest results.

View our latest analysis for Caterpillar

Following last week's earnings report, Caterpillar's 16 analysts are forecasting 2025 revenues to be US$64.5b, approximately in line with the last 12 months. Statutory earnings per share are forecast to dip 7.4% to US$20.69 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$65.9b and earnings per share (EPS) of US$22.08 in 2025. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the US$394 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Caterpillar analyst has a price target of US$493 per share, while the most pessimistic values it at US$250. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Caterpillar's past performance and to peers in the same industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 0.5% by the end of 2025. This indicates a significant reduction from annual growth of 9.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.2% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Caterpillar is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$394, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Caterpillar analysts - going out to 2027, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Caterpillar that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data 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 financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.