Caterpillar Inc. (CAT Quick QuoteCAT - Free Report) and Deere & Company (DE Quick QuoteDE - Free Report) continue to rank among the leading names in the heavy machinery industry. Caterpillar, globally recognized for its yellow equipment, serves a broad range of end markets including construction, mining, infrastructure, and oil & gas. Deere, best known for its green tractors, dominates the agricultural, forestry and turf equipment markets while also expanding its precision agriculture capabilities and maintaining a solid foothold in construction machinery.

With market capitalizations of roughly $409 billion for Caterpillar and $163 billion for Deere, both stocks serve as barometers of industrial, agricultural and infrastructure trends. The key question for investors is which stock currently offers the more compelling opportunity.

The Case for Caterpillar

Caterpillar has delivered positive revenue growth over the past three quarters and earnings growth in the past two. In the first quarter of 2026, the company generated roughly $17.4 billion in revenues, up 22% year over year, driven by higher sales volumes across its businesses. Adjusted earnings per share climbed 30.4% to $5.54, accelerating sharply from the modest 0.4% increase reported in fourth-quarter 2025. The performance was particularly notable given the estimated $600 million tariff impact during the quarter.

For 2026, Caterpillar expects low double-digit revenue growth compared with 2025. Adjusted operating margin is, however, projected toward the lower end of its range, due to continued tariff pressures, which are expected to create a full-year headwind of approximately $2.2-$2.4 billion.

At an annual revenue base of roughly $60 billion, Caterpillar expects adjusted operating margins between 15% and 19%. If revenues reach $72 billion, margins could improve to 18-22%, while a stronger scenario with $100 billion in revenues could support margins of 21-25%.

The company has also raised its long-term revenue CAGR target to 6-9% through 2030, compared with its earlier 5-7% outlook shared at Investor Day. Operational targets include growing Construction Industries’ sales to users by 1.25x from 2024 levels by 2030, tripling autonomous trucks in Resource Industries, and increasing Power Generation sales from 1.3x to more than 3x.

Connected assets are expected to rise from more than 1.6 million to 2 million, while e-commerce sales per business day are projected to jump from 4% to more than 50% by 2030. Services revenues are targeted to rise from $24 billion in 2025 to $30 billion by 2030.

Caterpillar’s growth is expected to be driven by U.S. infrastructure spending, mining demand linked to energy transition, automation adoption and rising data center and sustainability-related investments.

The Case for Deere

Deere returned to positive revenue growth in fourth-quarter fiscal 2025 after eight straight quarters of declines. However, earnings remained under pressure as higher production costs and tariff-related expenses offset volume improvements. The company is scheduled to report second-quarter fiscal 2026 results this week. Revenues are expected to increase 2.38%, but earnings are projected to decline 12.5%, indicating that a meaningful earnings recovery may still take time.

Deere expects net income for fiscal 2026 between $4.00 billion and $5 billion. The mid-point suggests a 10% decline from fiscal 2025. The company anticipates pre-tax direct tariff expenses of $1.2 billion for 2026, along with additional inflationary pressures stemming from the indirect impacts of tariffs.

Net sales for Production & Precision Agriculture are expected to decrease 5-10% year over year. Sales of Small Agriculture & Turf are expected to rise 15%. Sales of Construction & Forestry are projected to increase 15%. The Financial Services segment’s net income is expected to be $840 million.

The U.S. Department of Agriculture (USDA) forecasts a 0.7% year-over-year dip in net farm income to $153.4 billion in 2026. Total crop receipts are expected to edge up 1.2%, driven by higher corn and hay receipts.  However, in inflation-adjusted terms, total crop receipts are predicted to fall 0.7%. Meanwhile, total production expenses are expected to increase 1%. Direct government farm payments are expected to offer some relief, rising from $13.8 billion in 2025 to $44.3 billion in 2026.  Farmers may remain cautious about making large equipment purchases, which could weigh on Deere’s near-term performance. 

Despite these short-term challenges, Deere’s long-term growth outlook remains favorable. Rising global food demand driven by population growth, along with replacement demand for aging equipment, should support future agricultural equipment sales. Infrastructure spending is also expected to support demand for its construction machinery.

Deere continues to strengthen its competitive position through ongoing investments in innovation and geographic expansion. Its emphasis on advanced technologies and precision agriculture solutions positions the company well as farming becomes increasingly automated, efficient and data-driven.

How do Estimates Compare for CAT & DE?

The Zacks Consensus Estimate for Caterpillar’s 2026 sales is around $76 billion, suggesting year-over-year growth of around 12.4%. The estimate for earnings is $24.48 per share, indicating year-over-year growth of 28.4%. 

The consensus estimate for Caterpillar’s 2027 sales is $83.7 billion, indicating year-over-year growth of 10%. The earnings estimate for 2027 is $30.27 per share, implying year-over-year growth of 23.7%.

The Zacks Consensus Estimate for Deere’s fiscal 2026 sales is $40.8 billion, indicating year-over-year growth of 4.9%. The estimate for earnings is $18.01 per share, indicating a year-over-year fall of 2.7%. The fiscal 2027 estimate for sales implies growth of around 9% and the estimate for earnings is $23 per share, which indicates growth of 27.7%. 

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Both the earnings estimates for both companies have moved up over the past 60 days.

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Caterpillar & Deere: Price Performance & Valuation

In a year, CAT stock has soared 152%, whereas DE has gained 6.1%. 

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CAT is currently trading at a forward 12-month earnings multiple of 33.31X, while DE stock is currently trading at a forward 12-month earnings multiple of 27.1X.

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CAT’s return on equity of 48.21% is way higher than DE’s 18.93%. This reflects Caterpillar’s efficient use of shareholder funds in generating profits.

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CAT or DE: Which Stock is Better for Your Portfolio?

Both Caterpillar and Deere currently carry a Zacks Rank #3 (Hold), making the decision less straightforward. While both companies continue to face tariff-related challenges, Caterpillar has shown considerably stronger momentum through accelerating revenue, earnings and volume growth.

Deere’s long-term prospects tied to precision agriculture and global food demand remain attractive, but weaker farm economics and ongoing earnings pressure make the near-term setup less compelling. 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. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.