Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Caterpillar Inc., profitability ratios
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The profitability metrics demonstrate a generally positive trend from 2021 to 2023, followed by a moderation in 2024 and 2025. Significant improvements were observed in all margins and return ratios during the period, though recent performance suggests a potential stabilization or slight decline from peak levels.
- Gross Profit Margin
- The gross profit margin exhibited an increasing trend from 26.30% in 2021 to a peak of 34.49% in 2024. A subsequent decrease to 30.05% was noted in 2025, indicating potential pressures on cost of goods sold or pricing strategies. Overall, the margin improved substantially over the five-year period.
- Operating Profit Margin
- Similar to the gross profit margin, the operating profit margin increased from 14.27% in 2021 to 21.30% in 2024. The margin then decreased to 17.43% in 2025. This suggests that while operational efficiency improved significantly, recent performance indicates a potential reversal of that trend.
- Net Profit Margin
- The net profit margin followed the pattern of the other margins, rising from 13.47% in 2021 to 17.59% in 2024 before declining to 13.89% in 2025. This indicates that improvements in profitability were ultimately translated to the bottom line, but recent results suggest a weakening of this positive trend.
- Return on Equity (ROE)
- Return on equity demonstrated the most substantial increase, moving from 39.37% in 2021 to a high of 55.37% in 2024. A decrease to 41.67% in 2025 was observed, suggesting a potential reduction in the effectiveness of equity utilization. The overall trend indicates a significant improvement in returns to shareholders.
- Return on Assets (ROA)
- Return on assets also showed an upward trend, increasing from 7.84% in 2021 to 12.30% in 2024. A subsequent decline to 9.01% in 2025 was recorded. This suggests that the company became more efficient in utilizing its assets to generate profit, but recent performance indicates a potential slowdown in asset efficiency.
In summary, the period from 2021 to 2024 was characterized by substantial improvements in profitability across all measured ratios. However, the 2025 figures suggest a potential moderation of these gains, warranting further investigation into the underlying factors driving these recent changes.
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Return on Sales
Return on Investment
Gross Profit Margin
Caterpillar Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross margin | 19,228) | 21,164) | 21,102) | 15,224) | 12,675) | |
| Sales of Machinery, Power & Energy | 63,980) | 61,363) | 63,869) | 56,574) | 48,188) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 30.05% | 34.49% | 33.04% | 26.91% | 26.30% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Boeing Co. | 4.79% | -2.99% | 9.93% | 5.26% | 4.84% | |
| Eaton Corp. plc | 37.59% | 38.20% | 36.36% | 33.19% | 32.28% | |
| GE Aerospace | 31.55% | 30.79% | 21.95% | 24.55% | 24.19% | |
| Honeywell International Inc. | 36.93% | 38.09% | 37.28% | 36.99% | 35.85% | |
| Lockheed Martin Corp. | 10.15% | 9.75% | 12.55% | 12.56% | 13.52% | |
| RTX Corp. | 20.08% | 19.09% | 17.54% | 20.38% | 19.40% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Gross profit margin = 100 × Gross margin ÷ Sales of Machinery, Power & Energy
= 100 × 19,228 ÷ 63,980 = 30.05%
2 Click competitor name to see calculations.
The gross profit margin exhibited a generally positive trend from 2021 to 2023, followed by a decline in the most recent period. Simultaneously, gross margin in US dollar terms and sales of machinery, power & energy also demonstrated fluctuations over the five-year period.
- Gross Profit Margin Trend
- The gross profit margin increased from 26.30% in 2021 to 26.91% in 2022, representing a modest improvement. This upward trajectory continued with a more substantial increase to 33.04% in 2023. The margin peaked at 34.49% in 2024 before decreasing to 30.05% in 2025. This recent decline warrants further investigation to determine the underlying causes.
- Gross Margin (US$ in Millions) Trend
- Gross margin in US dollar terms increased consistently from $12,675 million in 2021 to $21,102 million in 2023. A slight increase to $21,164 million was observed in 2024. However, similar to the percentage margin, gross margin decreased to $19,228 million in 2025. This suggests that the decline in the gross profit margin in 2025 is not solely attributable to pricing pressures, but also reflects a reduction in overall gross margin dollars.
- Sales of Machinery, Power & Energy Trend
- Sales of machinery, power & energy increased from $48,188 million in 2021 to $56,574 million in 2022, and further to $63,869 million in 2023. A slight decrease to $61,363 million was noted in 2024, followed by a recovery to $63,980 million in 2025. The correlation between sales and gross margin suggests that sales volume significantly influences overall profitability.
The period between 2021 and 2024 demonstrates a positive relationship between increased sales and improved gross profit margin. The decrease in both gross profit margin and gross margin in 2025, despite a slight increase in sales, indicates potential challenges related to cost of goods sold or pricing strategies that require further scrutiny.
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Operating Profit Margin
Caterpillar Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating profit | 11,151) | 13,072) | 12,966) | 7,904) | 6,878) | |
| Sales of Machinery, Power & Energy | 63,980) | 61,363) | 63,869) | 56,574) | 48,188) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 17.43% | 21.30% | 20.30% | 13.97% | 14.27% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Boeing Co. | 4.79% | -16.10% | -0.99% | -5.33% | -4.66% | |
| Eaton Corp. plc | 18.98% | 18.62% | 16.75% | 14.55% | 15.69% | |
| GE Aerospace | 26.03% | 23.29% | 8.49% | 6.05% | 8.58% | |
| Honeywell International Inc. | 14.88% | 19.33% | 19.32% | 18.12% | 18.03% | |
| Lockheed Martin Corp. | 10.30% | 9.87% | 12.59% | 12.65% | 13.61% | |
| RTX Corp. | 10.50% | 8.10% | 5.17% | 8.07% | 7.70% | |
| Operating Profit Margin, Sector | ||||||
| Capital Goods | 12.79% | 9.56% | 10.11% | 8.29% | 9.11% | |
| Operating Profit Margin, Industry | ||||||
| Industrials | 11.88% | 9.94% | 9.90% | 9.06% | 9.24% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Operating profit margin = 100 × Operating profit ÷ Sales of Machinery, Power & Energy
= 100 × 11,151 ÷ 63,980 = 17.43%
2 Click competitor name to see calculations.
The operating profit margin exhibited a notable upward trend between 2021 and 2023, followed by a moderation in subsequent years. Operating profit increased consistently from 2021 to 2023, while sales also rose, but at a slower pace than profit, contributing to margin expansion. The period from 2023 to 2025 saw operating profit decline, though sales remained relatively stable, resulting in a contraction of the operating profit margin.
- Operating Profit Margin Trend
- In 2021, the operating profit margin stood at 14.27%. A slight decrease to 13.97% was observed in 2022. However, 2023 witnessed a substantial increase to 20.30%, representing the highest margin within the observed period. This positive momentum continued into 2024, with the margin reaching 21.30%. Subsequently, in 2025, the operating profit margin decreased to 17.43%, indicating a reversal of the prior upward trend.
- Relationship to Sales
- Sales of Machinery, Power & Energy increased from US$48,188 million in 2021 to US$56,574 million in 2022, and further to US$63,869 million in 2023. Sales experienced a slight decline in 2024 to US$61,363 million, before recovering to US$63,980 million in 2025. The most significant margin expansion occurred between 2022 and 2023, coinciding with a period of strong sales growth and even stronger operating profit growth. The decline in margin from 2024 to 2025 occurred despite a modest increase in sales, suggesting that profitability was impacted by factors other than revenue volume.
- Operating Profit Performance
- Operating profit increased from US$6,878 million in 2021 to US$7,904 million in 2022. A substantial increase was then recorded in 2023, reaching US$12,966 million. Operating profit remained relatively stable in 2024 at US$13,072 million, before decreasing to US$11,151 million in 2025. The decrease in operating profit in 2025 is a key driver of the observed margin contraction.
Overall, the period under review demonstrates a dynamic relationship between sales, operating profit, and the resulting operating profit margin. While initial years showed consistent growth and margin expansion, the latter years indicate a potential shift in the company’s profitability profile.
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Net Profit Margin
Caterpillar Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Profit attributable to common stockholders | 8,884) | 10,792) | 10,335) | 6,705) | 6,489) | |
| Sales of Machinery, Power & Energy | 63,980) | 61,363) | 63,869) | 56,574) | 48,188) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 13.89% | 17.59% | 16.18% | 11.85% | 13.47% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Boeing Co. | 2.50% | -17.77% | -2.86% | -7.41% | -6.75% | |
| Eaton Corp. plc | 14.89% | 15.25% | 13.87% | 11.86% | 10.92% | |
| GE Aerospace | 20.57% | 18.67% | 14.68% | 0.31% | -9.17% | |
| Honeywell International Inc. | 12.63% | 14.82% | 15.43% | 14.00% | 16.11% | |
| Lockheed Martin Corp. | 6.69% | 7.51% | 10.24% | 8.69% | 9.42% | |
| RTX Corp. | 7.60% | 5.91% | 4.64% | 7.75% | 6.00% | |
| Net Profit Margin, Sector | ||||||
| Capital Goods | 9.52% | 6.65% | 9.09% | 5.27% | 3.71% | |
| Net Profit Margin, Industry | ||||||
| Industrials | 9.59% | 8.06% | 8.32% | 5.04% | 5.85% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net profit margin = 100 × Profit attributable to common stockholders ÷ Sales of Machinery, Power & Energy
= 100 × 8,884 ÷ 63,980 = 13.89%
2 Click competitor name to see calculations.
The net profit margin exhibited considerable fluctuation over the five-year period. Initial values demonstrated a decline, followed by substantial improvement, and then a subsequent decrease. A detailed examination of the trend reveals key observations regarding the company’s profitability.
- Overall Trend
- The net profit margin began at 13.47% in 2021, decreased to 11.85% in 2022, and then experienced a significant increase, reaching 16.18% in 2023. This upward momentum continued into 2024, with the margin peaking at 17.59%. However, in 2025, the net profit margin decreased to 13.89%, representing a return towards levels observed earlier in the period.
- Year-over-Year Changes
- From 2021 to 2022, a decrease of 1.62 percentage points in the net profit margin was recorded. This was followed by a substantial increase of 4.33 percentage points from 2022 to 2023. The largest year-over-year change occurred between 2023 and 2024, with an increase of 1.41 percentage points. Finally, a decrease of 3.70 percentage points was observed between 2024 and 2025.
- Relationship to Sales
- Sales of Machinery, Power & Energy increased from US$48,188 million in 2021 to US$56,574 million in 2022, and continued to rise to US$63,869 million in 2023. A slight decrease to US$61,363 million occurred in 2024, before increasing again to US$63,980 million in 2025. While sales generally trended upward, the net profit margin did not consistently follow this pattern, indicating that factors beyond revenue generation influenced profitability.
- Profit Attributable to Common Stockholders
- Profit attributable to common stockholders increased from US$6,489 million in 2021 to US$6,705 million in 2022, then experienced a significant jump to US$10,335 million in 2023. This growth continued to US$10,792 million in 2024, before decreasing to US$8,884 million in 2025. The fluctuations in profit directly correlate with the observed changes in the net profit margin.
The observed volatility in the net profit margin suggests the company’s profitability is sensitive to changes in cost structures, pricing strategies, or other operational factors, in addition to sales volume. The decline in 2025 warrants further investigation to determine the underlying causes and potential implications for future performance.
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Return on Equity (ROE)
Caterpillar Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Profit attributable to common stockholders | 8,884) | 10,792) | 10,335) | 6,705) | 6,489) | |
| Equity attributable to common shareholders | 21,318) | 19,491) | 19,494) | 15,869) | 16,484) | |
| Profitability Ratio | ||||||
| ROE1 | 41.67% | 55.37% | 53.02% | 42.25% | 39.37% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Boeing Co. | 40.98% | — | — | — | — | |
| Eaton Corp. plc | 21.04% | 20.52% | 16.90% | 14.45% | 13.06% | |
| GE Aerospace | 46.60% | 33.90% | 34.63% | 0.62% | -16.17% | |
| Honeywell International Inc. | 34.01% | 30.64% | 35.68% | 29.74% | 29.85% | |
| Lockheed Martin Corp. | 74.65% | 84.26% | 101.24% | 61.86% | 57.62% | |
| RTX Corp. | 10.32% | 7.94% | 5.34% | 7.16% | 5.29% | |
| ROE, Sector | ||||||
| Capital Goods | 26.79% | 18.15% | 27.89% | 13.39% | 8.48% | |
| ROE, Industry | ||||||
| Industrials | 27.59% | 23.51% | 27.70% | 15.38% | 15.38% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
ROE = 100 × Profit attributable to common stockholders ÷ Equity attributable to common shareholders
= 100 × 8,884 ÷ 21,318 = 41.67%
2 Click competitor name to see calculations.
The Return on Equity (ROE) exhibited a generally positive trend between 2021 and 2024, followed by a decline in the most recent year presented. Profit attributable to common stockholders and equity attributable to common shareholders both increased over the period, though not consistently, influencing the ROE calculation.
- ROE Trend
- ROE increased from 39.37% in 2021 to 42.25% in 2022, demonstrating moderate improvement. This upward trajectory continued with more substantial gains, reaching 53.02% in 2023 and peaking at 55.37% in 2024. However, 2025 saw a notable decrease to 41.67%, representing a reversal of the prior trend.
- Profitability Component
- Profit attributable to common stockholders increased from US$6,489 million in 2021 to US$6,705 million in 2022, then experienced significant growth, reaching US$10,335 million in 2023 and US$10,792 million in 2024. A decrease to US$8,884 million was observed in 2025. This fluctuation in net income directly impacts the ROE calculation.
- Equity Component
- Equity attributable to common shareholders decreased slightly from US$16,484 million in 2021 to US$15,869 million in 2022. Subsequently, equity increased to US$19,494 million in 2023 and remained relatively stable at US$19,491 million in 2024. Further growth was observed in 2025, with equity reaching US$21,318 million. The increase in equity in later years, while contributing to higher absolute profits, may have partially offset the impact of profit growth on ROE in 2025.
The decline in ROE during 2025, despite continued growth in equity, suggests that the rate of profit growth did not keep pace with the expansion of the equity base. This indicates a potential decrease in the efficiency with which equity is being utilized to generate profits during that period.
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Return on Assets (ROA)
Caterpillar Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Profit attributable to common stockholders | 8,884) | 10,792) | 10,335) | 6,705) | 6,489) | |
| Total assets | 98,585) | 87,764) | 87,476) | 81,943) | 82,793) | |
| Profitability Ratio | ||||||
| ROA1 | 9.01% | 12.30% | 11.81% | 8.18% | 7.84% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Boeing Co. | 1.33% | -7.56% | -1.62% | -3.60% | -3.03% | |
| Eaton Corp. plc | 9.91% | 9.89% | 8.37% | 7.03% | 6.30% | |
| GE Aerospace | 6.69% | 5.32% | 5.81% | 0.12% | -3.28% | |
| Honeywell International Inc. | 6.42% | 7.59% | 9.20% | 7.97% | 8.60% | |
| Lockheed Martin Corp. | 8.38% | 9.59% | 13.19% | 10.84% | 12.41% | |
| RTX Corp. | 3.94% | 2.93% | 1.97% | 3.27% | 2.39% | |
| ROA, Sector | ||||||
| Capital Goods | 5.44% | 3.59% | 5.21% | 2.84% | 1.86% | |
| ROA, Industry | ||||||
| Industrials | 6.35% | 5.24% | 5.61% | 3.31% | 3.40% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
ROA = 100 × Profit attributable to common stockholders ÷ Total assets
= 100 × 8,884 ÷ 98,585 = 9.01%
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibited a clear upward trend from 2021 through 2024, followed by a decline in the most recent year presented. This indicates a changing efficiency in utilizing assets to generate profit.
- Overall Trend
- From 2021 to 2024, ROA increased consistently. It rose from 7.84% in 2021 to a peak of 12.30% in 2024. However, 2025 saw a notable decrease to 9.01%, representing a reversal of the prior trend.
- Profit Attributable to Common Stockholders
- Profit attributable to common stockholders increased significantly from 2021 to 2023, growing from US$6,489 million to US$10,335 million. While remaining high in 2024 at US$10,792 million, profit decreased to US$8,884 million in 2025. This profit fluctuation directly influences the ROA calculation.
- Total Assets
- Total assets experienced a moderate increase from 2021 to 2024, moving from US$82,793 million to US$87,764 million. A more substantial increase was observed in 2025, reaching US$98,585 million. The asset growth, coupled with the profit decline in 2025, contributed to the reduction in ROA.
- ROA Analysis
- The initial increase in ROA suggests improved asset utilization and profitability. The decline in 2025, despite continued asset growth, indicates that the company generated less profit per dollar of assets compared to previous years. This could be due to various factors, including increased costs, decreased sales efficiency, or investments in less immediately profitable assets.
The observed changes in ROA warrant further investigation to determine the underlying causes of the 2025 decline and assess the sustainability of future profitability.
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