Is CAT a high-quality business?

AlphaMadera's AlphaQuality grade scores Caterpillar Inc. on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how CAT compares to a Buffett-style quality bar.

What is Caterpillar Inc.'s AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to CAT based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes CAT a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

CAT - Caterpillar Inc.

Price: -- -- | CONSENSUS: Buy DETAILS | PRICE TARGET: $867.33 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Cyclical & Capital-Intensive

AlphaQuality — archetype-weighted quantitative grade

B+ 78.3 / 100 composite

Composite Grade

Composite of six pillars weighted for cyclical & capital-intensive businesses. Purely quantitative — no stock price or analyst input.

Profitability

Weight: 15%

B+ 79.7

5yr Avg ROIC 13.6% 75/100
Operating Margin Trend +1.31 pp/yr 90/100

Capital Efficiency

Weight: 15%

A+ 99.0

5yr Avg ROE 40.5% 100/100
5yr Share-Count CAGR -3.8% 97/100

Growth Quality

Weight: 10%

B+ 77.1

5yr Revenue CAGR 7.3% 72/100
5yr EPS CAGR 12.3% 83/100
Revenue-Growth Years (5) 4/5 80/100

Cash Generation

Weight: 15%

A- 81.3

5yr FCF Margin 12.3% 75/100
5yr FCF/NI Conversion 0.88x 88/100

Balance Sheet

Weight: 25%

A- 80.8

Net Debt / EBITDA 2.25x 65/100
Interest Coverage (EBIT/Int) 12.23x 88/100
Altman Z-Score 5.46 100/100

Stability

Weight: 20%

C 56.8

EPS Volatility (σ/μ) 0.59 22/100
Piotroski F-Score 8 89/100
Negative-Revenue Years (5) 1/5 80/100

4 of 4 gurus held; 2 added; 2 trimmed.

Holders: 4
Avg Δ position: +2.6%
New buys: 0
Full exits: 0

Wood decreased -52%
Cooperman increased +34%
Dalio increased +33%

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (15%) — 5yr Avg ROIC, Operating Margin Trend
Capital Efficiency (15%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (10%) — 5yr Revenue CAGR, 5yr EPS CAGR, Revenue-Growth Years (5)
Cash Generation (15%) — 5yr FCF Margin, 5yr FCF/NI Conversion
Balance Sheet (25%) — Net Debt / EBITDA, Interest Coverage (EBIT/Int), Altman Z-Score
Stability (20%) — EPS Volatility (σ/μ), Piotroski F-Score, Negative-Revenue Years (5)

We deliberately ignore stock price, analyst targets, and consensus ratings so the grade is suitable for backtesting forward returns. A minimum of 5 fiscal years of audited statements is required; distressed and highly leveraged infrastructure businesses are declared ungradable rather than forced into a numeric score.