Caterpillar heads into its Q1 2026 results on April 30 with options markets flashing the most defensive signal of the past year, even as the stock has rallied hard and analysts race to lift their targets.
Options positioning has rarely looked this cautious. The put/call ratio has climbed to 1.24, more than two standard deviations above its 20-day mean of 1.07 — a reading that's essentially at the 52-week high of 1.24. The PCR has drifted higher almost every session for two weeks, a steady build rather than a single-day spike, suggesting deliberate hedging rather than panic. With the print due at 10:30 a.m. today, this is the market pricing in uncertainty on a name that has run 18% in the past month alone.
The borrow side is not telling the same story. Short interest is low and has been easing. At 1.7% of the free float — roughly 8.1 million shares — and falling 3% on the week, there is no meaningful crowded-short setup here. Borrow costs have dropped nearly 35% over the past month to just 0.32%, reflecting abundant supply rather than any squeeze tension. Availability remains extremely loose. Put this together and the options activity looks less like short sellers loading up and more like long holders protecting gains from a stock that has ripped.
The Street has been confidently bullish in the run-up. Wells Fargo's Jerry Revich lifted his Overweight target from $870 to $960 last week. Truist Securities raised its Buy target from $786 to $920 three days before that. Citi's Buy call, now anchored at $905, has been refreshed twice this year. The outlier remains Morgan Stanley, maintaining its Underweight with a $430 target — a level so far below current trading at $817.87 that it reads more as a structural bear thesis on tariff headwinds than a near-term call. The mean analyst target of roughly $772 actually sits below the current price, reflecting how fast the stock has re-rated. The bear case is concrete: the construction segment took a 470 basis point margin hit and the resource segment 510 basis points, both driven by an $800 million incremental tariff headwind. Bulls point to a 71% year-over-year jump in backlog to $51.2 billion and 22.9% growth in the Power and Energy segment. That is the debate in a sentence.
Valuation has moved sharply with the price. The PE has expanded by 5.5 turns over the past month to 33.2x. Price-to-book is up nearly 3 points in the same window to 16.5x. Both reflect how much premium investors are willing to extend ahead of a print where consensus EPS sits at $4.64 and quarterly revenue is estimated near $16.4 billion. The EV/EBITDA multiple, by contrast, has compressed slightly — down about 0.7 over 30 days — which makes sense given rising earnings expectations. The RSI at 64.75 is elevated but not extreme, and the dividend score ranks at the 99th percentile, underscoring Caterpillar's income credentials even as the growth narrative takes centre stage.
Close peers confirm the cautious undertone in industrials this session. CMI fell 2.8% on the day, FLS dropped 3.3%, while WAB and NPO each fell between 1.5% and 1.8%. CAT's own 1.3% pullback on the final session of the week looks restrained by comparison, with the week still closing up 2.2%.
The last two earnings prints both produced positive reactions — a 2.2% next-day gain in January and, before that, a 3.9% one-day move with a 9.2% five-day follow-through. Whether that pattern holds against a margin headwind narrative and one of the most defensive options setups in a year is the key tension to watch when the numbers land this morning.
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