Caterpillar Stock Sees 18% Upside Amid Strong Growth Projections
Caterpillar, founded in 1925, is the world's largest manufacturer of construction and mining equipment. The company's machines are used to build infrastructure, mine materials, and power industrial operations. In recent years, Caterpillar has become increasingly tied to AI on several fronts: its equipment is becoming smarter with the integration of AI and autonomy, while the data-center buildout is creating demand for Caterpillar equipment to construct facilities and generate power.
The company's dividend history is impressive, having paid a cash dividend every year since its formation over a century ago. In fact, it has raised its annual dividend for 32 straight years. However, with the stock up 108% in the past year, 201% in the past three years, and 291% in the past five years, the dividend yield now sits at just 0.75%.
Analysts project strong growth for Caterpillar, with earnings expected to grow by 40.6% in 2026, 19.7% in 2027, and 19% in 2028. Revenue is also expected to increase, with a projected 18.4% growth in 2026, 11.6% in 2027, and 10.6% in 2028.
The stock has a consensus price target of ~$1,006 on CAT stock, implying about 18% upside to today's stock price. However, the company's forward P/E ratio is at a 10-year high, which could make it vulnerable to multiple compression if earnings growth falls short.