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 slight improvement in its valuation outlook. Despite this change, the company appears overvalued based on its current metrics, including a P/E ratio of 26, a Price to Book Value of 14.47, and an EV to EBITDA of 20.17. In comparison, peers such as Deere & Co. have a higher P/E ratio of 44.92, while Cummins, Inc. shows a lower EV to EBITDA of 18.21, suggesting Caterpillar's valuation remains elevated relative to its industry.
Caterpillar's stock has performed well recently, with a year-to-date return of 54.26%, significantly outpacing the S&P 500's return of 12.26% during the same period. This strong performance may reflect investor optimism, but the current valuation ratios suggest that the stock is overvalued.