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Caterpillar vs. Deere: Which Equipment Stock is the Better Buy Now?
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Key Takeaways
Caterpillar posted record Q3 2025 revenues of $17.6B, driven by a 10% rise in sales volume.
CAT sees 2025 revenues modestly higher as pricing and cost controls help offset tariff impacts.
CAT benefits from data center demand and infrastructure-driven strength across segments.
Caterpillar Inc. (CAT - Free Report) and Deere & Company (DE - Free Report) remain two of the most influential names in heavy machinery. Caterpillar, best known for its signature yellow equipment, serves a wide range of industries, including construction, mining, infrastructure, oil & gas, and transportation. Deere, famous for its iconic green tractors, dominates the agricultural, forestry and turf markets and has made strong strides in precision agriculture. It also maintains a presence in construction equipment.
With Caterpillar valued at roughly $257 billion and Deere at $129 billion, both stocks offer insights into the broader industrial, agricultural and infrastructure cycles. The key question for investors is: which one currently presents the better opportunity?
The Case for Caterpillar
In the third quarter of 2025, Caterpillar delivered a record $17.6 billion in quarterly revenues, up 9.5% year over year. This was mainly driven by a 10% increase in sales volume. The company also returned to revenue growth after six quarters of declines, with strength across all regions and segments. Earnings per share were $4.95, down 4% from the prior year due to tariff-related pressures.
CAT now expects 2025 revenues to be “modestly” higher compared with 2024, an improvement from its prior projection of “slightly” higher revenues. Net incremental tariffs are projected at $1.6-$1.75 billion for 2025. Caterpillar thus expects the adjusted operating margin to land near the bottom of its target range. The company’s pricing and cost-control initiatives should help cushion the impacts. The company maintains its revenue projection at $42-$72 billion, and margins are anticipated between 10% and 22%, per the respective revenue levels.
Looking ahead, CAT stands to benefit from the surge in projects, driven by the United States Infrastructure Investment and Jobs Act, creating opportunities for its diverse construction equipment portfolio. The shift toward clean energy will drive the demand for essential commodities, boosting the need for Caterpillar’s mining equipment. Meanwhile, given their efficiency and safety, CAT’s autonomous fleet are gaining momentum among miners.
As technology companies establish data centers globally to support their generative AI applications, the company is witnessing robust order levels for reciprocating engines for data centers. It is planning to double its output with a multi-year capital investment. Caterpillar recently entered into a long-term strategic collaboration with Hunt Energy Company, L.P., to meet the surging power needs of data centers. The first project is planned for Texas and is expected to serve as the launchpad for a multi-year program to deliver up to one gigawatt of power generation capacity for data centers across North America. Caterpillar has also entered into an agreement to develop advanced energy optimization solutions for data centers. This collaboration focuses on integrating Vertiv's power distribution and cooling portfolio with Caterpillar’s know-how in power generation and CCHP (Combined Cooling, Heat and Power).
CAT has been seeing growth in aftermarket parts and service-related revenues, which generate high margins. The company is thus focused on doubling its service revenues from $14 billion in 2016 to $28 billion in 2026.
The Case for Deere
DE has witnessed eight consecutive quarters of revenue declines and lower earnings over the last seven, due to lower volumes in the agriculture and construction businesses. Weak farmer spending due to low commodity prices, tariff uncertainty and rising material, labor and logistical costs has weighed on DE’s performance. In response to soft market conditions in the global agriculture and construction sectors, Deere has been aligning its production levels with demand. The company expects sales volumes to decline in 2025 from the prior-year’s reported level, with lower sales in all of its segments — Production & Precision Agriculture, Small Agriculture & Turf, and Construction & Forestry.
The company estimates the pretax impact of tariffs for fiscal 2025 will reach $600 million.
DE expects fiscal 2025 net income to be between $4.75 billion and $5.25 billion. The mid-point suggests a 29.6% decline from the net income of $7.1 billion reported in fiscal 2024.
The U.S. Department of Agriculture’s (USDA) projection for net farm income for 2025 is $179.8 billion, slightly lower than the earlier estimate of $180.1 billion. The updated figure indicates an increase of 40.7% from that reported in 2024. However, this growth mainly includes a $30.4 billion increase in direct government farm payments to $40.5 billion for 2025. Meanwhile, crop receipts are anticipated to decline 2.5% (previous expectation was 2.3%) from the prior year due to lower revenues for soybeans, corn and wheat. This will be offset by an 11.2% increase in animal and animal products receipts. Production expenses are also expected to move up 2.6%, leading to more pressure on farmers.
Despite this current weakness, agricultural equipment demand will be supported by increased global demand for food, stemming from population growth. Also, the need to replace ageing equipment will support DE’s top-line performance. The demand for its construction equipment will be supported by increased infrastructure spending.
Over the long term, Deere is well-positioned for growth, underpinned by consistent investments in innovation and geographic expansion. Its focus on launching products with advanced technologies and features provides it with a competitive edge. The company remains focused on revolutionizing agriculture with technology in an effort to make farming automated, easy to use and more precise across the production process.
How do Estimates Compare for CAT & DE?
The Zacks Consensus Estimate for Caterpillar’s 2025 sales is $66.11 billion, suggesting year-over-year growth of 2%. The estimate for earnings is $18.40 per share, indicating a year-over-year decline of 16%.
The consensus estimate for Caterpillar’s 2026 sales is $71.55 billion, indicating year-over-year growth of 8.2%. The earnings estimate for 2026 is $21.86 per share, implying year-over-year growth of 18.80%.
Both the earnings estimates have moved up over the past 60 days.
The Zacks Consensus Estimate for Deere’s fiscal 2025 sales is $38.31 billion, indicating a year-over-year decline of 14.4%. The estimate for earnings is $18.53 per share, indicating a year-over-year fall of 27.7%. The 2026 estimate for sales implies growth of 4.5% and the for earnings is $19.43 per share, which indicates growth of 4.87%.
Both earnings estimates for fiscal 2025 and 2026 have been trending south over the past 60 days.
Year to date, CAT stock has gained 50.5%, whereas DE has gained 12.4%.
Image Source: Zacks Investment Research
CAT is currently trading at a forward 12-month earnings multiple of 25.51X, while DE stock is currently trading at a forward 12-month earnings multiple of 23.49X.
Image Source: Zacks Investment Research
CAT’s return on equity of 47.16% is way higher than DE’s 21.97%. This reflects Caterpillar’s efficient use of shareholder funds in generating profits.
Image Source: Zacks Investment Research
CAT or DE: Which Stock is Better for Your Portfolio?
Both companies face near-term challenges, but Caterpillar shows stronger momentum, supported by rising volumes, renewed revenue growth and positive estimate revisions. Deere’s long-term outlook tied to agricultural technology and global food demand remains compelling, but near-term pressure from lower crop receipts and declining earnings makes the stock less attractive at the moment.
Caterpillar’s superior return on equity, improving fundamentals and exposure to major secular trends, such as data center expansion, energy transition and infrastructure investment, make it the more favorable choice for investors seeking industrial exposure.
Image: Bigstock
Caterpillar vs. Deere: Which Equipment Stock is the Better Buy Now?
Key Takeaways
Caterpillar Inc. (CAT - Free Report) and Deere & Company (DE - Free Report) remain two of the most influential names in heavy machinery. Caterpillar, best known for its signature yellow equipment, serves a wide range of industries, including construction, mining, infrastructure, oil & gas, and transportation. Deere, famous for its iconic green tractors, dominates the agricultural, forestry and turf markets and has made strong strides in precision agriculture. It also maintains a presence in construction equipment.
With Caterpillar valued at roughly $257 billion and Deere at $129 billion, both stocks offer insights into the broader industrial, agricultural and infrastructure cycles. The key question for investors is: which one currently presents the better opportunity?
The Case for Caterpillar
In the third quarter of 2025, Caterpillar delivered a record $17.6 billion in quarterly revenues, up 9.5% year over year. This was mainly driven by a 10% increase in sales volume. The company also returned to revenue growth after six quarters of declines, with strength across all regions and segments. Earnings per share were $4.95, down 4% from the prior year due to tariff-related pressures.
CAT now expects 2025 revenues to be “modestly” higher compared with 2024, an improvement from its prior projection of “slightly” higher revenues. Net incremental tariffs are projected at $1.6-$1.75 billion for 2025. Caterpillar thus expects the adjusted operating margin to land near the bottom of its target range. The company’s pricing and cost-control initiatives should help cushion the impacts. The company maintains its revenue projection at $42-$72 billion, and margins are anticipated between 10% and 22%, per the respective revenue levels.
Looking ahead, CAT stands to benefit from the surge in projects, driven by the United States Infrastructure Investment and Jobs Act, creating opportunities for its diverse construction equipment portfolio. The shift toward clean energy will drive the demand for essential commodities, boosting the need for Caterpillar’s mining equipment. Meanwhile, given their efficiency and safety, CAT’s autonomous fleet are gaining momentum among miners.
As technology companies establish data centers globally to support their generative AI applications, the company is witnessing robust order levels for reciprocating engines for data centers. It is planning to double its output with a multi-year capital investment. Caterpillar recently entered into a long-term strategic collaboration with Hunt Energy Company, L.P., to meet the surging power needs of data centers. The first project is planned for Texas and is expected to serve as the launchpad for a multi-year program to deliver up to one gigawatt of power generation capacity for data centers across North America. Caterpillar has also entered into an agreement to develop advanced energy optimization solutions for data centers. This collaboration focuses on integrating Vertiv's power distribution and cooling portfolio with Caterpillar’s know-how in power generation and CCHP (Combined Cooling, Heat and Power).
CAT has been seeing growth in aftermarket parts and service-related revenues, which generate high margins. The company is thus focused on doubling its service revenues from $14 billion in 2016 to $28 billion in 2026.
The Case for Deere
DE has witnessed eight consecutive quarters of revenue declines and lower earnings over the last seven, due to lower volumes in the agriculture and construction businesses. Weak farmer spending due to low commodity prices, tariff uncertainty and rising material, labor and logistical costs has weighed on DE’s performance.
In response to soft market conditions in the global agriculture and construction sectors, Deere has been aligning its production levels with demand. The company expects sales volumes to decline in 2025 from the prior-year’s reported level, with lower sales in all of its segments — Production & Precision Agriculture, Small Agriculture & Turf, and Construction & Forestry.
The company estimates the pretax impact of tariffs for fiscal 2025 will reach $600 million.
DE expects fiscal 2025 net income to be between $4.75 billion and $5.25 billion. The mid-point suggests a 29.6% decline from the net income of $7.1 billion reported in fiscal 2024.
The U.S. Department of Agriculture’s (USDA) projection for net farm income for 2025 is $179.8 billion, slightly lower than the earlier estimate of $180.1 billion. The updated figure indicates an increase of 40.7% from that reported in 2024. However, this growth mainly includes a $30.4 billion increase in direct government farm payments to $40.5 billion for 2025. Meanwhile, crop receipts are anticipated to decline 2.5% (previous expectation was 2.3%) from the prior year due to lower revenues for soybeans, corn and wheat. This will be offset by an 11.2% increase in animal and animal products receipts. Production expenses are also expected to move up 2.6%, leading to more pressure on farmers.
Despite this current weakness, agricultural equipment demand will be supported by increased global demand for food, stemming from population growth. Also, the need to replace ageing equipment will support DE’s top-line performance. The demand for its construction equipment will be supported by increased infrastructure spending.
Over the long term, Deere is well-positioned for growth, underpinned by consistent investments in innovation and geographic expansion. Its focus on launching products with advanced technologies and features provides it with a competitive edge. The company remains focused on revolutionizing agriculture with technology in an effort to make farming automated, easy to use and more precise across the production process.
How do Estimates Compare for CAT & DE?
The Zacks Consensus Estimate for Caterpillar’s 2025 sales is $66.11 billion, suggesting year-over-year growth of 2%. The estimate for earnings is $18.40 per share, indicating a year-over-year decline of 16%.
The consensus estimate for Caterpillar’s 2026 sales is $71.55 billion, indicating year-over-year growth of 8.2%. The earnings estimate for 2026 is $21.86 per share, implying year-over-year growth of 18.80%.
Both the earnings estimates have moved up over the past 60 days.
The Zacks Consensus Estimate for Deere’s fiscal 2025 sales is $38.31 billion, indicating a year-over-year decline of 14.4%. The estimate for earnings is $18.53 per share, indicating a year-over-year fall of 27.7%. The 2026 estimate for sales implies growth of 4.5% and the for earnings is $19.43 per share, which indicates growth of 4.87%.
Both earnings estimates for fiscal 2025 and 2026 have been trending south over the past 60 days.
Image Source: Zacks Investment Research
Caterpillar & Deere: Price Performance & Valuation
Year to date, CAT stock has gained 50.5%, whereas DE has gained 12.4%.
Image Source: Zacks Investment Research
CAT is currently trading at a forward 12-month earnings multiple of 25.51X, while DE stock is currently trading at a forward 12-month earnings multiple of 23.49X.
Image Source: Zacks Investment Research
CAT’s return on equity of 47.16% is way higher than DE’s 21.97%. This reflects Caterpillar’s efficient use of shareholder funds in generating profits.
Image Source: Zacks Investment Research
CAT or DE: Which Stock is Better for Your Portfolio?
Both companies face near-term challenges, but Caterpillar shows stronger momentum, supported by rising volumes, renewed revenue growth and positive estimate revisions. Deere’s long-term outlook tied to agricultural technology and global food demand remains compelling, but near-term pressure from lower crop receipts and declining earnings makes the stock less attractive at the moment.
Caterpillar’s superior return on equity, improving fundamentals and exposure to major secular trends, such as data center expansion, energy transition and infrastructure investment, make it the more favorable choice for investors seeking industrial exposure.
Currently, Caterpillar holds a Zacks Rank #3 (Hold), while Deere is rated Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.