Company DCF analysis file
Caterpillar DCF Analysis
A Caterpillar DCF must separate equipment operations from Financial Products. The group combines factory sales with credit and lease funding, so consolidated cash and industrial free cash flow answer different questions. FY2025 sales rose while operating profit declined; neither a sales forecast nor an industrial cash subtotal values the whole group alone.
Revenue, expenses and profit on one annual basis
Historical Caterpillar consolidated comparison, $ millions: FY2024 ended 2024-12-31 and FY2025 ended 2025-12-31. These annual periods are separate from the later interim observation below.
| Measure | FY2024 | FY2025 |
|---|---|---|
| Consolidated sales and revenues | 64,809 | 67,589 |
| Cost of goods sold | 40,199 | 44,752 |
| Selling, general and administrative | 6,667 | 6,985 |
| Research and development | 2,107 | 2,148 |
| Other operating expense | 1,478 | 1,194 |
| Financial Products interest within operating costs | 1,286 | 1,359 |
| Total operating costs | 51,737 | 56,438 |
| Operating profit | 13,072 | 11,151 |
| Profit attributable to common shareholders | 10,792 | 8,884 |
Source: Annual financial statements. Annual values are reported unless a row is marked derived.
The finance business interest row is part of consolidated operating costs, unlike ordinary industrial financing interest. Removing all group interest to create an industrial EBIT would change the financial-services economics. Factory cost, pricing and dealer replenishment must explain the industrial margin; the lending portfolio then needs a separate credit and funding case.
Keep industrial sales and finance revenue on their own basis
| Reported sales and revenues, $ millions | FY2024 | FY2025 |
|---|---|---|
| Machinery, Power & Energy | 61,363 | 63,980 |
| Financial Products | 3,446 | 3,609 |
Source: Annual business disclosures and financial notes. Annual values are reported unless a row is marked derived.
The industrial row is not end-user retail sales. Dealer purchases and dealer stock can move differently from customers using the equipment. Finance revenue also requires a funded portfolio, rather than being an extra high-margin factory product. The two activities need compatible but distinct forecast units.
Reconcile reported cash before forecasting investor cash
| Measure | FY2024 | FY2025 |
|---|---|---|
| Consolidated operating cash | 12,035 | 11,739 |
| 2025 MP&E operating cash | Separate scope | 12,278 |
| 2025 Financial Products operating cash | Separate scope | 1,074 |
| 2025 consolidating cash adjustment | Separate scope | -1,613 |
| 2025 MP&E capex | Industrial deduction | 2,794 |
| 2025 MP&E FCF: derived | Industrial measure | 9,484 |
Source: Annual cash-flow statement and related notes. Annual values are reported unless a row is marked derived.
The 2025 operating-cash populations reconcile as 12,278 + 1,074 - 1,613 = $11,739 million. Industrial FCF is instead 12,278 - 2,794 = $9,484 million. Neither subtracting industrial capex from consolidated cash nor simply adding finance cash to industrial cash reproduces the issuer industrial measure.
The later interim period stays separate
| Observation | Period-specific evidence |
|---|---|
| Reported period basis | Q2 2026 covers 2026-04-01 through 2026-06-30 and was released 2026-08-04. Revenue was $20,543 million in this quarter. |
| Interpretation boundary | The consolidated operating-cash row includes Financial Products cash. It is not the industrial Machinery, Power & Energy free-cash-flow measure; dealer inventory movements and equipment demand do not remove the finance business's funding needs. |
Source: official reporting for the stated period. The dated quarter is not annualized here and is not added to either full-year column. Later reporting must be checked before refreshing the valuation date.
Turn the statements into a DCF operating case
For equipment operations, forecast price, volume, manufacturing cost, inventory and dealer/customer collection terms before capital investment and operating taxes. For Financial Products, reconcile originations, collections, credit losses, leased equipment and matched borrowing. A sum-of-parts or fully consolidated method must preserve those boundaries. Finance borrowing cannot be deducted as industrial net debt while keeping the lending assets outside the value calculation.
| Driver | Evidence to carry into the forecast | Downside condition to test |
|---|---|---|
| Dealer replenishment | End-user sales, dealer stock and factory shipments | Dealer destocking follows weaker retail demand |
| Power and industrial demand | Production capacity, realized prices and input costs | Orders do not support the assumed factory margin |
| Finance funding | Portfolio collections, credit losses and matched funding cost | Receivable growth needs more cash while credit quality weakens |
Test industrial destocking separately from deterioration in the financing book. Use recast segment comparisons for the later Rail allocation and distinguish the RPMGlobal acquisition from FY2025 history. A single group cash-conversion ratio cannot describe both manufacturing and customer finance.
Use the Caterpillar financial analysis for the broader operating context, the company forecast to state the operating assumptions, and the DCF calculator only after defining the investor cash stream. Keep the statement definitions, reporting dates and your own assumptions visible when comparing valuation cases.
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