Caterpillar's Forward P/S of 4.5x Tops Peers, Q4 Profit Down 9%
Caterpillar trades at a forward price-to-sales ratio of 4.5x, above the 3.47x industry average and peers Komatsu (1.5x) and Terex (1.02x), while sporting a Value Score of D. Q4 revenue reached a record $19.1 billion (up 18% YoY) but adjusted operating profit fell 9% to $2.66 billion as margins narrowed to 15.6%.
1. Premium Valuation Relative to Peers
Caterpillar’s forward price-to-sales ratio stands at 4.5x, surpassing the manufacturing, construction and mining industry average of 3.47x. Peers Komatsu and Terex trade at 1.5x and 1.02x respectively, while Caterpillar maintains a Value Score of D, reflecting its premium valuation among competitors.
2. Q4 Financial Results and Margin Pressure
In the fourth quarter, Caterpillar posted record revenues of $19.1 billion, up 18% year over year, driven by higher volumes across all segments. However, cost of sales increased 29% due to tariff-related expenses, causing adjusted operating profit to decline 9% to $2.66 billion and operating margin to narrow to 15.6%.
3. 2026 Outlook and Tariff Headwinds
For fiscal 2026, the company forecasts revenue growth near the upper end of its 5–7% long-term CAGR target, with adjusted operating margins projected at 15–19% on $60 billion of revenue. A tariff headwind of $2.6 billion is expected to pressure margins, with potential expansion to 18–22% if revenues reach $72 billion.