Caterpillar (NYSE: CAT) Stock Rating Upgrade and Financial Performance Review

• Raymond James upgraded Caterpillar (NYSE: CAT) to "Outperform," indicating a positive future outlook.
• The company reported mixed Q4 financial results, with revenue of $16.2 billion and adjusted earnings per share of $5.14.
• Caterpillar's stock has seen a 29% return since the start of 2024, despite a recent 5% drop following a projection of declining sales and profitability.

Caterpillar (NYSE: CAT) is a leading manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines. The company operates globally, serving industries such as construction, mining, and energy. Caterpillar competes with companies like Komatsu and John Deere. On February 3, 2025, Raymond James upgraded Caterpillar's stock rating to "Outperform," signaling a positive outlook on the company's future performance.

Despite the upgrade, Caterpillar's recent Q4 financial results show a mixed performance. The company reported revenue of $16.2 billion, missing the consensus estimate of $16.4 billion. This shortfall is due to lower dealer inventory levels, which affected the company's top-line performance. However, Caterpillar's adjusted earnings per share exceeded expectations, coming in at $5.14 compared to the anticipated $5.02.

Caterpillar has projected a decline in sales and profitability for the upcoming year, which has not been well-received by investors. This projection led to a 5% drop in the stock price on January 30. Despite this recent dip, CAT stock has delivered a 29% return since the start of 2024, closely aligning with the S&P 500 index's 27% increase.

In Q4, Caterpillar's revenue experienced a 5% year-over-year decline, with specific segments such as Construction Industries seeing an 8% decrease. The current stock price of CAT is $364.88, reflecting a decrease of 1.77% or $6.56. Today, the stock has traded as low as $359.69 and as high as $368.55. Over the past year, CAT has reached a high of $418.50 and a low of $307.05.

Caterpillar's market capitalization stands at approximately $176.17 billion, with a trading volume of 1,322,312 shares on the NYSE. For those seeking more stable returns, the High-Quality portfolio, which has outperformed the S&P with over 91% returns since its inception, may be a consideration.