Caterpillar's Power Generation Business Is Nearly as Big as Its Construction Segment. Here's What That Shift Means for the Stock's Multiple
It's not a construction equipment name that also offers power-generation solutions anymore. Now it's a power-production business that also sells construction equipment, and is priced like it in the era of AI's growth.
Overview
Investors mostly know Caterpillar (NYSE: CAT) as a maker of bulldozers and backhoes, and construction equipment is still a huge part of its business, to be sure.
What was only an ancillary part of its business mix, however, is quickly becoming an important profit center for the company. This new center is Caterpillar's power generation unit, which offers conventional combustion-power generators, gas turbines, and even some solar power solutions.
Details
This shift -- or perhaps more precisely, the reason for this shift -- is affecting the stock's valuation in a way the market is likely to support for the foreseeable future.
Source
Originally published at www.fool.com.