Caterpillar Has Potential For Multiple Expansion Post Earnings, Goldman Sachs Says

Core Viewpoint - Goldman Sachs analyst Jerry Revich maintains a Buy rating and a price forecast of $442 for Caterpillar, Inc., despite mixed fourth quarter FY24 results, with total sales declining 5% year-over-year to $16.215 billion, missing consensus expectations [1] Group 1: Financial Performance - Total sales and revenue for the fourth quarter FY24 were $16.215 billion, which is a 5% decline year-over-year and below the consensus of $16.411 billion [1] - Adjusted earnings per share (EPS) for the quarter were $5.14, exceeding the consensus estimate of $4.99 [1] - For FY25, sales are expected to decline approximately 1% due to unfavorable pricing and lower interest income [2] Group 2: Margin Outlook and Operational Highlights - The key discussion point is whether the 2025 margin outlook represents a cyclical trough, with current targets approximately 200 basis points below FactSet consensus [3] - Positive highlights include a significant increase in destocking amounting to $700 million and a book-to-bill ratio of 1.08x in orders [2] - Despite concerns over margin targets, the progress in destocking, strong bookings, and effective cost management could support multiple expansion post-earnings [3] Group 3: Future Earnings Estimates - The analyst estimates EPS of $21.68 for FY25 and $23.33 for FY26 [4] - Following the earnings report, CAT shares experienced a decline of 4.51%, trading at $375.51 [4]