Construction equipment company Caterpillar (NYSE: CAT) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 18% year on year to $19.13 billion. Its non-GAAP profit of $5.16 per share was 9.5% above analysts’ consensus estimates.

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"Our centennial year marked a significant milestone, underscored by the highest full-year sales and revenues in Caterpillar's history and a single-quarter record of $19.1 billion," said Caterpillar CEO Joe Creed.

Company Overview

With its iconic yellow machinery working on construction sites, Caterpillar (NYSE: CAT) manufactures construction equipment like bulldozers, excavators, and parts and maintenance services.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, Caterpillar’s sales grew at a solid 10.1% compounded annual growth rate over the last five years. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Caterpillar’s recent performance shows its demand has slowed as its revenue was flat over the last two years. We also note many other Construction Machinery businesses have faced declining sales because of cyclical headwinds. While Caterpillar’s growth wasn’t the best, it did do better than its peers.

This quarter, Caterpillar reported year-on-year revenue growth of 18%, and its $19.13 billion of revenue exceeded Wall Street’s estimates by 7.8%.

Looking ahead, sell-side analysts expect revenue to grow 4.8% over the next 12 months. While this projection implies its newer products and services will fuel better top-line performance, it is still below the sector average.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

Caterpillar has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 16.8%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, Caterpillar’s operating margin rose by 3 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Caterpillar generated an operating margin profit margin of 13.9%, down 4.1 percentage points year on year. Since Caterpillar’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Caterpillar’s EPS grew at an astounding 25.7% compounded annual growth rate over the last five years, higher than its 10.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into Caterpillar’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Caterpillar’s operating margin declined this quarter but expanded by 3 percentage points over the last five years. Its share count also shrank by 14.6%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Caterpillar, its two-year annual EPS declines of 5.2% mark a reversal from its (seemingly) healthy five-year trend. We hope Caterpillar can return to earnings growth in the future.

In Q4, Caterpillar reported adjusted EPS of $5.16, up from $5.14 in the same quarter last year. This print beat analysts’ estimates by 9.5%. Over the next 12 months, Wall Street expects Caterpillar’s full-year EPS of $19.08 to grow 15%.

Key Takeaways from Caterpillar’s Q4 Results

We were impressed by how significantly Caterpillar blew past analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates handily as well. Overall, this print was solid. The stock traded up 2.4% to $658.58 immediately after reporting.

Is Caterpillar an attractive investment opportunity at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).