Caterpillar Upgraded to Buy Ahead of Earnings Report

Caterpillar Inc. (CAT) has been upgraded to a Buy rating ahead of its upcoming Q3 earnings report. Analysts believe the stock is undervalued, given its strong forward earnings per share (EPS) growth and favorable risk/reward profile.

The company's Q2 results were impressive, with EPS of $8.17 beating the consensus estimate of $7.20. Revenue reached $20.5 billion, up 23.5% year-over-year, and the order backlog stands at $72.1 billion. These results highlight Caterpillar's robust performance in a challenging economic environment.

Looking ahead, Caterpillar's 2026 EPS forecast has been raised from $24.72 to $27.19. Using a 30x P/E ratio and a reasonable PEG ratio, analysts have assigned an intrinsic value of $930 to the stock. This suggests significant upside potential from current levels.

Technical indicators for CAT are mixed, but the stock has found support above $770. The improving Relative Strength Index (RSI) supports a long position, with a stop-loss recommendation below $770. The company remains one of the top performers among the Dow 30 components year-to-date.