Caterpillar (CAT) Stock: Why This Data Center Deal Has Wall Street Buzzing

TLDR

• Caterpillar locked in a 2 GW power generator deal with Monarch Compute Campus targeting AI data center infrastructure demand
• Q4 earnings crushed forecasts with $5.16 EPS versus $4.67 expected and revenue of $19.13 billion beating $17.81 billion estimates
• Shares rallied 4.7% to $688.23 as Citigroup lifted price target from $710 to $760 maintaining buy rating
• Institutional ownership stands at 70.98% while insiders sold $31.1 million worth of shares last quarter
• Court approved Caterpillar’s RPMGlobal acquisition at A$5.00 per share through subsidiary Revolution HoldCo

Caterpillar just grabbed a piece of the AI infrastructure boom. The company secured a 2 gigawatt natural gas generator and battery storage contract with Monarch Compute Campus.

Caterpillar Inc., CAT

This order puts Caterpillar squarely in the data center power game. AI workloads need massive amounts of electricity, and tech companies are racing to lock down reliable energy sources.

The stock responded accordingly. Shares jumped $30.87 to close at $688.23 on Monday with volume hitting 2,070,074 shares.

The momentum didn’t come from nowhere. Caterpillar just delivered quarterly numbers that blew past Wall Street’s expectations.

Fourth quarter earnings landed at $5.16 per share against the $4.67 consensus. Revenue reached $19.13 billion versus analyst estimates of $17.81 billion.

That revenue figure represents a 17.9% year-over-year increase. The company posted a 13.14% net margin and 45.76% return on equity for the quarter.

Analysts Boost Price Targets

Citigroup raised its target from $710 to $760 with a buy rating intact. The new target suggests 10.4% upside from current prices.

JPMorgan went higher still, moving their target from $740 to $765 with an overweight rating. William Blair set a $735 target after reviewing the earnings.

HSBC upgraded from hold to strong-buy back in November. Sanford C. Bernstein kept a market perform rating with a $678 price objective.

Across 25 analysts, the consensus reads “Moderate Buy” with an average target of $678.29. The breakdown includes one strong-buy, sixteen buys, seven holds, and one sell rating.

Stock Performance and Fundamentals

The recent gains cap off a strong run. Shares are up 8.6% over the past week and 15.5% for the month.

Year-to-date performance matches that monthly gain at 15.5%. The twelve-month return stands at 93.7%.

Looking further back, three-year returns hit 188.5% while five-year gains reach 283.7%.

The company now carries a $322.08 billion market cap. It trades at 36.57 times earnings with a PEG ratio of 2.53 and beta of 1.58.

The stock’s fifty-day moving average sits at $604.31. The two-hundred-day moving average comes in at $520.61.

Caterpillar’s debt-to-equity ratio stands at 1.44 with a current ratio matching that figure. The quick ratio registers at 0.94.

Ownership Changes

Insiders sold 54,729 shares valued at approximately $31.1 million in the most recent quarter. Insider ownership now sits at 0.33%.

CFO Andrew R.J. Bonfield offloaded 10,000 shares at $575.06 each on December 31st. Anthony D. Fassino sold 8,184 shares in November at $570.18 per share.

Institutional investors control 70.98% of the company. Valeo Financial Advisors increased its stake by 36,842.1% in Q2 to hold 7,299,751 shares worth $2.83 billion.

Norges Bank established a new position worth $2.17 billion. Wellington Management Group expanded holdings by 3,949.8% to own 5,228,058 shares valued at $2.49 billion.

The Federal Court of Australia approved Caterpillar’s acquisition of RPMGlobal Holdings. Subsidiary Revolution HoldCo will acquire all shares at A$5.00 each, with RPMGlobal shares set for suspension from ASX trading upon implementation.

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