Caterpillar Inc. (CAT), headquartered in Irving, Texas, manufactures and sells construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. Valued at $166.4 billion by market cap, the company manufactures engines and other related parts for its equipment, and offers financing and insurance. 

Companies worth $10 billion or more are generally described as “large-cap stocks,” and CAT perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the farm & heavy construction machinery industry. CAT is a global leader in construction equipment, with a strong reputation for quality and reliability. It has a vast dealer network spanning 191 countries, making Caterpillar's dominance clear. Their focus on R&D, particularly in next-generation construction machines, keeps them ahead of the curve.

Despite its notable strength, CAT slipped 15.6% from its 52-week high of $418.50, achieved on Nov. 7, 2024. Over the past three months, CAT stock gained 3.6%, outperforming the Dow Jones Industrials Average’s ($DOWI) marginal gains during the same time frame.

In the longer term, shares of CAT dipped 2.6% on a YTD basis but climbed 7.6% over the past 52 weeks, underperforming DOWI’s YTD marginal gains and 10% returns over the last year.

To confirm the bullish trend, CAT has been trading above its 50-day moving average since early May. However, the stock has been trading below its 200-day moving average since mid-February.

CAT's lackluster performance can be due to declining volumes in its Resource Industries and Construction Industries segments, driven by subdued customer spending. Resource Industries volumes have fallen for seven quarters and Construction Industries for six quarters. Even the Energy and Transportation segment, previously resilient, reported volume declines in the last two quarters. The downturn in China's real estate sector, weak demand in Europe, and a contraction in the U.S. manufacturing sector have also impacted CAT's revenue.

On Apr. 30, CAT shares closed up marginally after reporting its Q1 results. Its adjusted EPS of $4.25 did not meet Wall Street expectations of $4.30. The company’s revenue was $14.3 billion, missing Wall Street forecasts of $14.5 billion.

CAT’s rival, Komatsu Ltd. (KMTUY)shares lagged behind the stock, with a 7.2% uptick over the past 52 weeks but outpaced the stock with 14.1% returns on a YTD basis.

Wall Street analysts are moderately bullish on CAT’s prospects. The stock has a consensus “Moderate Buy” rating from the 21 analysts covering it, and the mean price target of $368.79 suggests a potential upside of 4.4% from current price levels.