Caterpillar's Power Generation Business Surpasses Construction Sales
Caterpillar's power generation business is growing rapidly and may soon rival its construction segment in terms of revenue. The company's power and energy unit saw a 17% year-over-year increase in revenue to over $8.2 billion last quarter, nearing the company-leading construction-related sales of just over $8.3 billion.
This shift towards power generation is largely driven by the increasing demand for electricity in data centers, which are utilizing Caterpillar's conventional combustion-powered generators for auxiliary and primary power. The company is also supplying natural gas power turbines to customers willing to invest in the technology.
The growth of Caterpillar's power generation business has significant implications for its stock valuation. Analysts believe that the company's shares may not be fully valued, with a current consensus price target of $991.21 more than 20% above the ticker's current price.