Caterpillar Surpasses 50-Day SMA: Is Now a Good Time to Invest?

Caterpillar Inc. Surpasses Key Technical Support

Caterpillar Inc. (CAT) has recently moved above a crucial support level, drawing attention from investors interested in technical analysis. The stock crossed its 50-day simple moving average (SMA) yesterday, which may indicate a short-term upward trend.

The 50-day SMA is a popular metric among traders, often serving as both a support and resistance point and signaling possible trend shifts. Earlier this year, CAT traded above this average but slipped below it on March 18. After experiencing some volatility, the stock has now reclaimed its position above the 50-day SMA, suggesting renewed optimism in the market.

CAT Breaks Above the 50-Day Moving Average

Source: Zacks Investment Research

CAT Outpaces Industry, Sector, and Competitors

So far in 2024, CAT shares have risen 23.6%, slightly ahead of the manufacturing - construction and mining sector, which saw a 23.4% increase. The Zacks Industrial Products sector gained 8%, while the S&P 500 fell by 4.9%. Competitors such as Komatsu and Terex Corporation have not kept pace with CAT, as illustrated below.

Source: Zacks Investment Research

Is now the right moment to invest in CAT for potential gains? Let’s examine the company’s latest financial results and fundamentals.

Q4 2025: Record Revenue and Return to Earnings Growth

In the fourth quarter of 2025, Caterpillar posted a record $19.1 billion in revenue, up 18% from the previous year, driven by increased sales across all divisions. The backlog also reached a new high of $51.2 billion.

However, sales costs jumped 29% year-over-year, mainly due to higher manufacturing expenses and tariffs. Adjusted operating profit fell 9% to $2.66 billion. Despite these challenges, earnings per share edged up 0.4% to $5.16, marking a return to positive earnings growth after five consecutive quarters of declines for Caterpillar.

2026 Outlook: Revenue Growth Expected, Margin Pressures Remain

Caterpillar anticipates revenue growth for 2026 to be near the upper end of its long-term target range of 5-7% CAGR. However, adjusted operating margins are expected to be at the lower end of the target range due to an estimated $2.6 billion impact from tariffs.

Projected adjusted operating margins are 15–19% at $60 billion in revenue, 18–22% at $72 billion, and 21–25% if revenue reaches $100 billion.

Upward Trend in Earnings Estimates

The Zacks Consensus Estimate forecasts CAT’s earnings to grow by approximately 19.2% in 2026, with revenue expected to increase by 9.3%. For 2027, earnings are projected to rise by 21.8% and revenue by 8.9%.

Source: Zacks Investment Research

Over the past 90 days, estimates for both 2026 and 2027 have been revised upward.

Source: Zacks Investment Research

Strong Returns for Investors

Caterpillar’s return on equity stands at 45.76%, surpassing the industry average of 45.10% and the S&P 500’s 32.67%.

CAT Shares Trade at a Premium

CAT is currently valued at a forward price-to-earnings ratio of 29.57, which is slightly higher than the industry average of 28.39. Komatsu and Terex trade at lower multiples of 17.21 and 11.62, respectively.

Source: Zacks Investment Research

Long-Term Growth Prospects

Caterpillar aims for a compound annual revenue growth rate of 5–7% through 2030, with MP&E free cash flow expected to range from $6 billion to $15 billion. The company plans to return nearly all MP&E free cash flow to shareholders and increase its dividend at a high single-digit rate.

• Construction Industries sales to users targeted to grow 1.25 times by 2030 (from 2024 levels)
• Resource Industries: Autonomous truck fleet to triple
• Power Generation sales expected to double
• Connected assets projected to rise from over 1.6 million to 2 million
• E-commerce sales per business day anticipated to jump from 4% to over 50% by 2030

These goals are supported by increased U.S. infrastructure investment, rising demand for mining equipment driven by the energy transition, and greater adoption of autonomous technologies for productivity and safety. In Power & Energy, sustainability efforts and data-center investments are fueling growth.

The company is also expanding its high-margin aftermarket business, aiming to boost service revenues from $24 billion in 2025 to $30 billion by 2030.

Conclusion: CAT’s Investment Appeal

Caterpillar benefits from strong demand, improving earnings, and a robust services-focused business model. Although tariffs may limit margin expansion in the near term, the company’s substantial backlog, favorable macroeconomic conditions, and consistent estimate upgrades support its growth outlook. CAT appears well-positioned for continued success, making it an attractive option for investors even at a premium valuation. Currently, CAT holds a Zacks Rank #2 (Buy).