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, 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 expanding its precision agriculture capabilities and construction machinery.

With market capitalizations of roughly $381 billion for Caterpillar and $175 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 four quarters and earnings growth in the past three. In the second quarter of 2026, revenues gained 24% year over year to $20.5 billion, driven by higher sales volumes across its businesses. Adjusted earnings per share surged 73% to a record $8.17 in the quarter. Sales exceeded $20 billion for the first time in Caterpillar’s history and backlog reached a record $72 billion. 

Backed by this performance, Caterpillar now expects 2026 sales and revenues to increase in the mid-to-high teens, up from its previous low-double-digit growth forecast. The outlook reflects upbeat performance across its primary segments. The company stated that 59% of its $72 billion backlog is expected to be delivered over the next 12 months. The ratio has remained relatively stable over the past three quarters, underscoring continued demand momentum.

Full-year Machinery, Power & Energy (MP&E) free cash flow is expected to land in the upper half of the company’s $6-$15 billion target range. 

Caterpillar is positioned to benefit from several secular growth trends, including U.S. infrastructure spending, mining demand related to the energy transition, automation adoption, data center expansion and sustainability investments.

To capitalize on rising power-generation and oil-and-gas demand, CAT will restart production of its 10-megawatt gas engine platform, which was discontinued in 2022. It plans to bring about 1.5 gigawatts of capacity back online, with shipments to begin in the fourth quarter. It is also expanding turbine capacity and has repurposed a 250,000-square-foot facility in Wamego, KS. CAT is simultaneously investing in services, e-commerce, sustainability, electrification and other digital initiatives. It expects service revenues to increase from $24 billion in 2025 to $30 billion by 2030, providing an additional source of recurring, higher-margin growth. 

The Case for Deere

Deere has reported positive revenue growth for four consecutive quarters, while earnings returned to growth in the third quarter of fiscal 2026 after 10 straight quarters of declines.

Net sales from Deere’s equipment operations were $11 billion in third-quarter fiscal 2026, up 6.2% year over year. Higher shipment volumes and favorable price realization in the Small Agriculture & Turf and Construction & Forestry segments more than offset lower shipment volumes in Production & Precision Agriculture. Total net sales (including Financial Services and other income) rose 5% year over year to $12.61 billion. Deere reported third-quarter fiscal 2026 earnings of $5.10 per share, up 7.4% year over year.

For fiscal 2026, this trend is expected to continue. Deere projects a 10% decline for the Production and Precision Agriculture segment while sales of Small Agriculture and Turf and Construction & Forestry segments are expected to rise 15% and 20%, respectively. The Financial Services segment’s net income is expected to be $870 million.

Deere raised its fiscal 2026 net income forecast to $4.75-$5 billion from the previous range of $4.5-$5 billion. However, this remains below the $5.027 billion reported in fiscal 2025. Equipment Operations net operating cash flow is expected to be $5-$5.50 billion.

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 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, projected at $44.3 billion in 2026, up 45% year over year.  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 $79 billion, suggesting year-over-year growth of around 16.6%. The estimate for earnings is $27.14 per share, indicating year-over-year growth of 42.4%. 

The consensus estimate for Caterpillar’s 2027 sales is $87.3 billion, indicating year-over-year growth of 10.7%. The earnings estimate for 2027 is $32.72 per share, implying year-over-year growth of 20.6%.

The Zacks Consensus Estimate for Deere’s fiscal 2026 sales is $41.4 billion, indicating year-over-year growth of 6.4%. The estimate for earnings is $18.11 per share, indicating a year-over-year fall of 2.1%. The fiscal 2027 estimate for sales implies growth of 9.4% and the estimate for earnings is $22.65 per share, which indicates growth of 25%. 

Image Source: Zacks Investment Research

The earnings estimates for Caterpillar have moved up over the past 60 days while the estimates for Deere have been revised downward. 

Image Source: Zacks Investment Research

Caterpillar & Deere: Price Performance, Valuation & Other Comparisons

In a year, CAT stock has soared 88%, whereas DE has gained 33%. 

Image Source: Zacks Investment Research

CAT is currently trading at a forward 12-month earnings multiple of 26.37X, while DE stock is currently trading at a forward 12-month earnings multiple of 30.10X.

Image Source: Zacks Investment Research

CAT’s return on equity of 55.53% is way higher than DE’s 18.10%. 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?

Caterpillar currently has the stronger setup, supported by record sales, a robust backlog, accelerating earnings growth and an upgraded 2026 outlook. Its exposure to infrastructure spending, mining, energy, data centers and power generation also provides multiple avenues for growth beyond the traditional construction cycle. In addition, upward earnings revisions, a higher ROE and a comparatively attractive valuation strengthen the investment case.

Deere offers attractive long-term potential through precision agriculture, automation and growing global food demand. However, weak farm economics and continued pressure in its largest agricultural business could limit near-term upside.

Deere currently carries a Zacks Rank #3 (Hold) while Caterpillar sports a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.