247Wallst·2026-02-25 14:15Core Insights - Caterpillar and Deere reported contrasting earnings, with Caterpillar achieving record revenue driven by data center demand, while Deere faced significant profit declines in agriculture [1] Group 1: Caterpillar's Performance - Caterpillar's Q4 2025 revenue reached $19.13 billion, exceeding the consensus estimate of $16.2 billion, with a 44% year-over-year surge in power generation [1] - The Power & Energy segment grew 23% to $9.40 billion, contributing significantly to Caterpillar's success [1] - Caterpillar ended 2025 with a record backlog of $51 billion, up 71% from the previous year [1] Group 2: Deere's Performance - Deere's Q1 fiscal 2026 revenue was $9.61 billion, a 13% increase year-over-year, with EPS of $2.42 beating the estimate of $2.10 [1] - The Production & Precision Agriculture segment saw a 59% collapse in operating profit, with margins dropping from 11.0% to 4.4% [1] - Despite challenges, Deere's Construction & Forestry operating profit more than doubled [1] Group 3: Market Outlook and Challenges - Caterpillar faces $2.6 billion in incremental tariff costs in 2026, impacting margins in Construction and Resource Industries [1] - Deere anticipates a 15% to 20% decline in large agriculture markets in 2026, with a projected $1.2 billion pretax tariff expense [1] - Both companies are navigating tariff impacts but from different operational angles [1] Group 4: Valuation and Growth Potential - Caterpillar's stock has increased 34% year-to-date and 130% over the past year, with a current trailing P/E of 41x and forward P/E of 23x [1] - Deere's stock is up 38% year-to-date, with a trailing P/E of 35x and forward P/E of 23x, indicating a more modest one-year gain of 35% [1] - Caterpillar's growth is supported by a strong backlog and expansion plans, while Deere's recovery hinges on agricultural market conditions [1]