CAT
Caterpillar Inc.
Industrials · Farm & Heavy Construction Machinery · United States · Stock
Score Breakdown
Scored for Dividend Income profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- The composite score of 50.4/100 reflects a balance of genuine strengths — solid profitability margins and a strong multi-year dividend track record — offset by a significant FY2025 earnings decline and mixed quarterly momentum.
- The dividend factor scored highest among the graded components, anchored by four consecutive years of per-share dividend growth and a sustainable 31.0% payout ratio.
- The growth factor was penalized by the 17.7% drop in net income and 14.7% decline in diluted EPS despite modest revenue growth, pulling the overall score to a medium-risk, research-further classification.
Why Not Higher
- The sharp contraction in net income (-17.7%) and diluted EPS (-14.7%) in FY2025, combined with uneven quarterly operating income, prevented a higher composite score despite solid profitability margins.
- The absence of any macro theme assignment means Caterpillar received zero theme-related score contribution, capping its total score under the current model methodology.
Data Confidence
8 / 10
High — most data fields present
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew from FY2024's $64,809,000,000 to FY2025's $67,589,000,000, a gain of +4.3%, but net income fell from FY2024's $10,788,000,000 to FY2025's $8,882,000,000 (-17.7%), and diluted EPS declined from FY2024's $22.05 to FY2025's $18.81 (-14.7%).
The model rewarded modest top-line expansion but penalized the significant contraction in bottom-line profitability and per-share earnings, resulting in a below-average growth score.
In FY2025, Caterpillar posted an operating margin of 16.5%, a net margin of 13.1%, and a return on assets of 9.0%.
These metrics reflect solid earnings efficiency and asset utilization, which the model recognized with an above-average profitability score.
Filing evidence currently available does not support a more specific explanation for this factor.
Quarterly revenue rose from 2025Q2's $16,569,000,000 to a peak of 2025Q4's $19,133,000,000 before pulling back to 2026Q1's $17,415,000,000. Net income showed a steadier upward trend across the same four quarters: $2,179,000,000 in 2025Q2, $2,299,000,000 in 2025Q3, $2,401,000,000 in 2025Q4, and $2,548,000,000 in 2026Q1. Operating income was more variable, rising to $3,052,000,000 in 2025Q3, dipping to $2,660,000,000 in 2025Q4, then recovering to $3,085,000,000 in 2026Q1.
The model appears to have tempered the momentum score due to the mixed pattern — revenue decelerated after its 2025Q4 peak and operating income was uneven — even as net income trended consistently upward.
Dividends per share have risen consecutively from FY2022's $4.71 to FY2023's $5.10, FY2024's $5.53, and FY2025's $5.94, while the FY2025 dividend payout ratio stood at a conservative 31.0% of net income.
The model rewarded the consistent multi-year dividend growth streak alongside a sustainable payout ratio, reflecting both shareholder return commitment and ample earnings coverage.
Caterpillar is not currently assigned to any of the 24 tracked macro themes in the model.
The absence of a theme assignment means the security did not receive any theme-related score contribution under the model's current methodology; this is a neutral classification rather than a reflection of the company's business quality.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Caterpillar delivered modest top-line growth of 4.3% in FY2025, but net income fell 17.7% and diluted EPS dropped 14.7%, weighing on its overall score. Profitability metrics remain solid, with a 16.5% operating margin, 13.1% net margin, and 9.0% return on assets. The dividend profile is a clear strength, with per-share dividends rising consecutively from $4.71 in FY2022 to $5.94 in FY2025 at a conservative 31.0% payout ratio. Quarterly momentum is mixed — net income has trended steadily upward into 2026Q1, but revenue pulled back after a 2025Q4 peak and operating income has been uneven, leaving the composite score at a medium-risk level warranting further research.
Plain English
Caterpillar is a large industrial company that grew its sales modestly last year but saw profits drop significantly, while consistently raising its dividend and maintaining healthy profit margins — making it a mixed picture that deserves a closer look before drawing conclusions.
Bull Case vs. Bear Case
Bull Case
- Caterpillar has raised its dividend per share every year from $4.71 in FY2022 to $5.94 in FY2025, with a conservative 31.0% payout ratio suggesting the dividend is well-covered and has room to grow further.
- Profitability metrics are above average, with a 16.5% operating margin, 13.1% net margin, and 9.0% return on assets in FY2025, reflecting solid earnings efficiency.
- Net income has trended consistently upward across the most recent four quarters, rising from $2,179M in 2025Q2 to $2,548M in 2026Q1, suggesting underlying earnings momentum even as revenue fluctuated.
Bear Case
- Despite top-line growth of 4.3%, net income fell 17.7% and diluted EPS declined 14.7% in FY2025, signaling meaningful margin or cost pressure at the bottom line.
- Quarterly revenue peaked at $19,133M in 2025Q4 and pulled back to $17,415M in 2026Q1, and operating income has been uneven, raising questions about the sustainability of recent growth.
- Caterpillar is not assigned to any of the model's 24 tracked macro themes, meaning it receives no theme-related score contribution, which limits its ranking potential under the current methodology.
What Could Change the Picture
Bullish Triggers
- A sustained recovery in operating income — moving consistently above the $3,085M level seen in 2026Q1 — alongside stabilization or growth in quarterly revenue would signal that the FY2025 earnings decline was temporary.
- Continued dividend increases beyond the $5.94 FY2025 level, especially if paired with bottom-line profit recovery, would reinforce the shareholder return thesis.
Bearish Triggers
- If net income fails to recover toward FY2024's $10,788M level and the downward EPS trend from $22.05 to $18.81 continues, the profitability advantage could erode materially.
- A further deceleration in quarterly revenue below the 2026Q1 level of $17,415M would suggest demand weakness that could pressure both margins and dividend sustainability.
Risk Profile
Medium RiskQuarterly operating income has been variable — rising to $3,052M in 2025Q3, dipping to $2,660M in 2025Q4, then recovering to $3,085M in 2026Q1 — and revenue decelerated after its 2025Q4 peak, introducing uncertainty about near-term earnings consistency. The financial health factor received a mid-range score against total assets of $98,585M, but specific balance sheet details are not available from the current filing evidence to elaborate further.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.