Is Caterpillar, Inc. overvalued or undervalued?

As of 21 November 2025, the valuation grade for Caterpillar, Inc. moved from very expensive to expensive, indicating a shift in perception regarding its valuation. The company appears to be overvalued based on its current metrics, particularly with a P/E ratio of 26, a Price to Book Value of 14.47, and an EV to EBITDA ratio of 20.17. In comparison, peers such as Deere & Co. have a significantly higher P/E of 44.92, while Cummins, Inc. has a lower EV to EBITDA of 18.21, suggesting that Caterpillar's valuation does not align favorably with its industry counterparts.
Caterpillar's recent stock performance has been strong, with a year-to-date return of 51.73%, significantly outperforming the S&P 500's return of 12.26% over the same period. However, despite this impressive performance, the current valuation metrics suggest that the stock may not be a prudent investment at its present price level.