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CAT Vs DE: Which Heavy Machinery Stock is the Better Bet Now?
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Caterpillar Inc. (CAT - Free Report) and Deere & Company (DE - Free Report) are two of the world’s leading heavy equipment manufacturers. Caterpillar, widely recognized by its signature yellow machines, manufactures construction and mining equipment serving a variety of sectors like infrastructure, construction, mining, oil and gas, and transportation. Deere, known for its iconic green tractors, specializes in agricultural, forestry and turf equipment, with a strong presence in precision farming technology and construction equipment.
Caterpillar (with a market capitalization of $140 billion) and Deere ($125 billion) are closely watched by investors to gauge the health of the broader manufacturing, infrastructure and agricultural landscape. With tariff tensions and contraction in the manufacturing sector weighing on industrials at large, the question is which stock you should put your money on.
To find out, let us dive into the fundamentals, growth prospects and challenges of both Caterpillar and Deere.
The Case for Caterpillar
CAT's revenues have declined for the past four quarters, with earnings also falling in the last two quarters. This reflects persistent volume weakness in its two major segments, Resource Industries and Construction Industries, amid subdued customer spending. Resource Industries volumes have dropped for six quarters in a row, while Construction Industries has seen five consecutive declines, which negated the improved performance of the Energy and Transportation segment.
Caterpillar has also been impacted by the downturn in China's real estate sector, particularly for 10-ton and larger excavators, which was once a key market for the company. Weak demand in Europe added to revenue pressures.
The charts below show Caterpillar's revenue and earnings trends in the past four quarters.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
For 2025, CAT expects a slight revenue dip from its 2024 reported number of $64.8 billion, led by lower Construction Industries and Resource Industries sales, which will negate expected strength in Energy and Transportation. However, Caterpillar projects its adjusted operating margin to be in the top half of its target range, corresponding to the anticipated level of revenues. The company maintains its broad revenue guidance at $42-$72 billion, with margins between 10% and 22%. Assuming 2025 revenues at $64.5 billion, its operating margin is likely to be 16-20%. While high labor costs and potential tariffs remain risks, Caterpillar’s pricing and cost-control initiatives should help cushion the impacts.
Looking ahead, CAT stands to benefit from the surge in projects, driven by the United States Infrastructure Investment and Jobs Act, creating opportunities for its diverse construction equipment portfolio. The shift toward clean energy will drive the demand for essential commodities, boosting the need for Caterpillar’s mining equipment. Meanwhile, given their efficiency and safety, CAT’s autonomous fleets are gaining momentum among miners. As technology companies establish data centers globally to support their generative AI applications, the company is witnessing robust order levels for reciprocating engines for data centers. It is planning to double its output with a multi-year capital investment.
CAT has been seeing growth in aftermarket parts and service-related revenues, which generate high margins. The company is thus focused on doubling its service revenues from $14 billion in 2016 to $28 billion in 2026.
The Case for Deere
DE has registered top-line declines in the past six quarters and lower earnings over the last five due to lower volumes in the agriculture and construction businesses. Weak farmer spending due to low commodity prices, and rising material, labor and logistical costs have weighed on DE’s performance.
The charts below show Deere's revenue and earnings trends in the past four quarters.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
In response to soft market conditions in the global agriculture and construction sectors, Deere has been aligning its production levels with demand. The company expects sales volumes to decline in 2025 from the prior year’s reported level, with lower sales in all of its segments — Production & Precision Agriculture, Small Agriculture & Turf, and Construction & Forestry.
DE expects the fiscal 2025 net income between $5 billion and $5.5 billion. The mid-point of the view suggests a 26% decline from the net income of $7.1 billion reported in fiscal 2024.
The U.S. Department of Agriculture projects net farm income to increase 30% year over year to $180.1 billion. However, the increase will mainly be driven by a $33.1-billion year-over-year increase in direct Government farm payments. Crop receipts are anticipated to decrease 2.3% from the 2024 reported level due to lower soybeans and corn prices.
Despite this current weakness, agricultural equipment demand will supported by increased global demand for food, stemming from population growth and an increasing proportion of the population aspiring for better living standards. The need to replace aging equipment will also support DE’s top-line performance. The demand for its construction equipment will be supported by increased infrastructure spending.
Over the long term, Deere is well-positioned for growth, underpinned by consistent investments in innovation and geographic expansion. Focus on launching products with advanced technologies and features provides it a competitive edge. The company remains focused on revolutionizing agriculture with technology in an effort to make farming automated, easy to use and more precise across the production process.
How Do Estimates Compare for CAT & DE?
The Zacks Consensus Estimate for Caterpillar’s 2025 earnings is at $19.32, indicating a year-over-year decline of 11.8%. The estimate for 2026 suggests a rise of 11.3%. EPS estimates for both 2025 and 2026 have been trending south over the past 60 days.
The Zacks Consensus Estimate for Deere’s fiscal 2025 earnings is at $19.15, indicating a year-over-year fall of 25.3%. The 2026 estimate implies growth of 12.8%. Both estimates have been trending south over the past 60 days. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Image Source: Zacks Investment Research
CAT & DE: Price Performance, Valuation & Other Comparisons
Year to date, the CAT stock has declined 20%, whereas DE has gained 6.8%. DE has outperformed the Industrial Products Sector’s decline of 14.2% and the S&P 500’s 10.7% fall.
CAT & DE's YTD Performance Against Sector & S&P 500
Image Source: Zacks Investment Research
CAT is currently trading at a forward 12-month earnings multiple of 14.45X, lower than its five-year median. The DE stock is currently trading at a forward 12-month earnings multiple of 22.14X, higher than its five-year median. CAT is also trading at a discount to the sector average of 16.38X and the S&P 500’s 19.48X.
Image Source: Zacks Investment Research
CAT’s return on equity of 58.18% is way higher than DE’s 27.31%. CAT also outscores the sector’s 20.1% and the S&P 500’s 31.11.%. This reflects Caterpillar’s efficient use of shareholder funds in generating profits.
Image Source: Zacks Investment Research
CAT’s dividend yield of 1.94% is higher than DE’s 1.43%.
Image Source: Zacks Investment Research
CAT or DE: Which Stock is Better for Your Portfolio?
Both are navigating near-term challenges, as evident by the recent results, the earnings estimate revision activity and the expected decline in the upcoming results. While Deere has strong long-term prospects tied to global food demand and agricultural technology innovation, its current valuation is less favorable.
Conversely, Caterpillar offers a higher dividend yield and its valuation is more attractive. The company’s return on equity is also significantly higher. CAT stands to benefit from secular trends like infrastructure spending, AI-driven data center growth and the energy transition. Investors looking for industrial exposure might consider Caterpillar to be the more favorable option at this time.
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CAT Vs DE: Which Heavy Machinery Stock is the Better Bet Now?
Caterpillar Inc. (CAT - Free Report) and Deere & Company (DE - Free Report) are two of the world’s leading heavy equipment manufacturers. Caterpillar, widely recognized by its signature yellow machines, manufactures construction and mining equipment serving a variety of sectors like infrastructure, construction, mining, oil and gas, and transportation. Deere, known for its iconic green tractors, specializes in agricultural, forestry and turf equipment, with a strong presence in precision farming technology and construction equipment.
Caterpillar (with a market capitalization of $140 billion) and Deere ($125 billion) are closely watched by investors to gauge the health of the broader manufacturing, infrastructure and agricultural landscape. With tariff tensions and contraction in the manufacturing sector weighing on industrials at large, the question is which stock you should put your money on.
To find out, let us dive into the fundamentals, growth prospects and challenges of both Caterpillar and Deere.
The Case for Caterpillar
CAT's revenues have declined for the past four quarters, with earnings also falling in the last two quarters. This reflects persistent volume weakness in its two major segments, Resource Industries and Construction Industries, amid subdued customer spending. Resource Industries volumes have dropped for six quarters in a row, while Construction Industries has seen five consecutive declines, which negated the improved performance of the Energy and Transportation segment.
Caterpillar has also been impacted by the downturn in China's real estate sector, particularly for 10-ton and larger excavators, which was once a key market for the company. Weak demand in Europe added to revenue pressures.
The charts below show Caterpillar's revenue and earnings trends in the past four quarters.
For 2025, CAT expects a slight revenue dip from its 2024 reported number of $64.8 billion, led by lower Construction Industries and Resource Industries sales, which will negate expected strength in Energy and Transportation. However, Caterpillar projects its adjusted operating margin to be in the top half of its target range, corresponding to the anticipated level of revenues. The company maintains its broad revenue guidance at $42-$72 billion, with margins between 10% and 22%. Assuming 2025 revenues at $64.5 billion, its operating margin is likely to be 16-20%. While high labor costs and potential tariffs remain risks, Caterpillar’s pricing and cost-control initiatives should help cushion the impacts.
Looking ahead, CAT stands to benefit from the surge in projects, driven by the United States Infrastructure Investment and Jobs Act, creating opportunities for its diverse construction equipment portfolio. The shift toward clean energy will drive the demand for essential commodities, boosting the need for Caterpillar’s mining equipment. Meanwhile, given their efficiency and safety, CAT’s autonomous fleets are gaining momentum among miners. As technology companies establish data centers globally to support their generative AI applications, the company is witnessing robust order levels for reciprocating engines for data centers. It is planning to double its output with a multi-year capital investment.
CAT has been seeing growth in aftermarket parts and service-related revenues, which generate high margins. The company is thus focused on doubling its service revenues from $14 billion in 2016 to $28 billion in 2026.
The Case for Deere
DE has registered top-line declines in the past six quarters and lower earnings over the last five due to lower volumes in the agriculture and construction businesses. Weak farmer spending due to low commodity prices, and rising material, labor and logistical costs have weighed on DE’s performance.
The charts below show Deere's revenue and earnings trends in the past four quarters.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
In response to soft market conditions in the global agriculture and construction sectors, Deere has been aligning its production levels with demand. The company expects sales volumes to decline in 2025 from the prior year’s reported level, with lower sales in all of its segments — Production & Precision Agriculture, Small Agriculture & Turf, and Construction & Forestry.
DE expects the fiscal 2025 net income between $5 billion and $5.5 billion. The mid-point of the view suggests a 26% decline from the net income of $7.1 billion reported in fiscal 2024.
The U.S. Department of Agriculture projects net farm income to increase 30% year over year to $180.1 billion. However, the increase will mainly be driven by a $33.1-billion year-over-year increase in direct Government farm payments. Crop receipts are anticipated to decrease 2.3% from the 2024 reported level due to lower soybeans and corn prices.
Despite this current weakness, agricultural equipment demand will supported by increased global demand for food, stemming from population growth and an increasing proportion of the population aspiring for better living standards. The need to replace aging equipment will also support DE’s top-line performance. The demand for its construction equipment will be supported by increased infrastructure spending.
Over the long term, Deere is well-positioned for growth, underpinned by consistent investments in innovation and geographic expansion. Focus on launching products with advanced technologies and features provides it a competitive edge. The company remains focused on revolutionizing agriculture with technology in an effort to make farming automated, easy to use and more precise across the production process.
How Do Estimates Compare for CAT & DE?
The Zacks Consensus Estimate for Caterpillar’s 2025 earnings is at $19.32, indicating a year-over-year decline of 11.8%. The estimate for 2026 suggests a rise of 11.3%. EPS estimates for both 2025 and 2026 have been trending south over the past 60 days.
The Zacks Consensus Estimate for Deere’s fiscal 2025 earnings is at $19.15, indicating a year-over-year fall of 25.3%. The 2026 estimate implies growth of 12.8%. Both estimates have been trending south over the past 60 days. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Image Source: Zacks Investment Research
CAT & DE: Price Performance, Valuation & Other Comparisons
Year to date, the CAT stock has declined 20%, whereas DE has gained 6.8%. DE has outperformed the Industrial Products Sector’s decline of 14.2% and the S&P 500’s 10.7% fall.
CAT & DE's YTD Performance Against Sector & S&P 500
Image Source: Zacks Investment Research
CAT is currently trading at a forward 12-month earnings multiple of 14.45X, lower than its five-year median. The DE stock is currently trading at a forward 12-month earnings multiple of 22.14X, higher than its five-year median. CAT is also trading at a discount to the sector average of 16.38X and the S&P 500’s 19.48X.
Image Source: Zacks Investment Research
CAT’s return on equity of 58.18% is way higher than DE’s 27.31%. CAT also outscores the sector’s 20.1% and the S&P 500’s 31.11.%. This reflects Caterpillar’s efficient use of shareholder funds in generating profits.
Image Source: Zacks Investment Research
CAT’s dividend yield of 1.94% is higher than DE’s 1.43%.
Image Source: Zacks Investment Research
CAT or DE: Which Stock is Better for Your Portfolio?
Both Caterpillar and Deere currently have a Zacks Rank #3 (Hold), which makes choosing one stock a difficult task. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Both are navigating near-term challenges, as evident by the recent results, the earnings estimate revision activity and the expected decline in the upcoming results. While Deere has strong long-term prospects tied to global food demand and agricultural technology innovation, its current valuation is less favorable.
Conversely, Caterpillar offers a higher dividend yield and its valuation is more attractive. The company’s return on equity is also significantly higher. CAT stands to benefit from secular trends like infrastructure spending, AI-driven data center growth and the energy transition. Investors looking for industrial exposure might consider Caterpillar to be the more favorable option at this time.