Caterpillar Inc.

Caterpillar’s sales and earnings are less predictable than a true tollbooth business. Its revenue is tied closely to global infrastructure, mining and commodity cycles. Indeed, recent years illustrate this variability: after a pandemic-driven surge in 2021-2022 (revenues jumped 25% in 2022), demand has eased.

Full-year 2024 revenue fell ~3.4% to $64.8B, and Q1-Q2 2025 revenues are down further). Quarterly results have swung with dealer inventory levels and Chinese market weakness (e.g. 2025 Q1 sales fell 10% YoY). While management benefits from backlog and infrastructure spending, high borrowing costs have cooled orders.

There is no subscription or recurring revenue in core sales, aside from Cat Financial services. Predictable contributions come from aftermarket parts, but this alone is not enough to smooth the cycles. For long-term investors, these cyclicals mean Caterpillar’s growth and cash flow can dip significantly during downturns, reducing predictability.

Thus, we rate Caterpillar’s revenue and FCF growth predictability as relatively low.