For investors prioritizing resilience in a recession or equipment-cycle downturn, Caterpillar (NYSE: CAT) has the stronger structural case in the latest disclosures. Its businesses span construction, mining and other resource industries, power and energy, aftermarket services, dealers and financing. That mix does not remove cyclicality, but it reduces dependence on one customer group.
Deere (NYSE: DE) remains a high-quality industrial company with valuable technology and a potentially larger rebound opportunity if large agriculture reaches a cyclical bottom. Its fiscal-2025 results and fiscal-2026 outlook, however, show clearer exposure to weak farm-equipment demand. The practical choice is therefore CAT for broader downturn diversification, or DE for investors willing to accept greater agricultural-cycle risk in exchange for more recovery sensitivity.
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Quick verdict: CAT for resilience, DE for a more concentrated recovery bet
Caterpillar’s 2025 results show sales growth, substantial operating cash flow and a large services business even as profit per share declined. Deere’s fiscal-2025 results show a sharper contraction in sales and earnings, and management expects fiscal-2026 net income to fall again before the large-agriculture cycle potentially bottoms.
That contrast matters in a downturn. CAT’s construction, resource, power and energy exposure can still weaken together when customers defer capital spending, dealers reduce inventories or credit conditions tighten. Deere’s earnings are more directly tied to farm income, crop prices, interest rates and replacement timing, especially in large agriculture. Small agriculture, turf, construction and forestry provide diversification, but not the same breadth as CAT’s portfolio.
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Deere could outperform if the large-agriculture market recovers faster than expected. A cyclical trough often creates powerful operating leverage for an equipment maker because factories, dealers and suppliers are already in place. The evidence available today supports a resilience preference for CAT, not a claim that CAT will deliver the higher stock return or that DE is permanently impaired.
CAT and DE at a glance
| Measure | Caterpillar | Deere | Why it matters in a downturn |
|---|---|---|---|
| Latest reported period | Calendar 2025 | Fiscal 2025 | Periods do not align; compare direction, not just totals. |
| Sales and revenues | $67.6 billion in 2025, versus $64.8 billion in 2024 | $45.684 billion in fiscal 2025, down 12% year over year | CAT had top-line growth; DE was already contracting. |
| Net income or profit measure | $18.81 profit per share in 2025, down from $22.05 | $5.027 billion net income and $18.50 per share, versus $7.100 billion and $25.62 | Both experienced earnings pressure, with a larger reported decline at DE. |
| Operating cash flow | $11.7 billion of enterprise operating cash flow | $5.1 billion of equipment-operations cash flow | Cash generation funds dividends, buybacks, investment and debt service. |
| Services or aftermarket | $24 billion of services revenue in 2025 | Integrated technology and support strategy; comparable services revenue not stated in the cited release | Recurring activity can soften the effect of new-equipment volatility. |
| Capital returned | $7.9 billion through repurchases and dividends in 2025 | More than $2.8 billion through dividends and repurchases in fiscal 2025 | Returns are valuable, but preserving liquidity is more important during a severe downturn. |
| Next-year outlook | No single consolidated 2026 net-income range cited here | Fiscal-2026 net income forecast at $4.00-$4.75 billion | DE’s guidance implies another difficult year before a possible large-ag bottom. |
| Same-day valuation | Not established in the cited disclosures | Not established in the cited disclosures | A resilience comparison is not a valuation conclusion. |
The figures come from Caterpillar’s 2025 Form 10-K and 2025 full-year results, Caterpillar’s 2025 annual-report highlights, and Deere’s fiscal-2025 earnings release. Caterpillar reports on a calendar-year basis, while Deere’s fiscal year ends on a different schedule, so a stock decision should normalize the dates before drawing precise year-over-year conclusions.
1. End-market diversification
Caterpillar’s four-business mix
Caterpillar identifies Construction Industries, Resource Industries, Power & Energy and Financial Products as its primary businesses. Construction includes equipment used in infrastructure, commercial building and general construction. Resource Industries serves mining and other heavy-resource applications. Power & Energy supplies engines, turbines, generator sets and related systems. Financial Products provides financing connected with equipment purchases and leases.
These markets are all economically sensitive, but their cycles do not always turn at the same time. A government infrastructure program can support construction while private commercial building slows. Commodity prices can delay mine expansion but encourage maintenance of existing fleets. Grid investment, data-center power demand, distributed generation and backup power can create orders that are not tied directly to farm income. The diversification is a source of relative resilience, not a guarantee of stable quarterly earnings.
Deere’s concentration and offsets
Deere’s core exposure is agriculture, supported by construction and forestry, small agriculture and turf, and a technology platform. Large agriculture is the key swing factor because high-horsepower tractors and combines carry substantial prices and are purchased in cycles tied to farm profitability and replacement decisions.
Deere’s fiscal-2025 release says large agriculture remains challenged. It expects small agriculture and turf, as well as construction and forestry, to improve. Those businesses provide useful offsets, but the latest outlook still identifies large agriculture as the principal weak end market. This makes DE more sensitive to crop prices, acreage, farm balance sheets, interest rates and the age of the installed equipment fleet.
How diversification changes recession behavior
CAT is generally better positioned when the downturn is broad but uneven: construction may weaken while power demand, mining maintenance or dealer-supported parts remain comparatively firm. DE can be highly competitive when the downturn is concentrated outside agriculture, but a synchronized farm-equipment correction affects its largest market directly.
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2. Current sales, profit and cash-flow direction
Caterpillar: higher sales, lower per-share profit
Caterpillar reported 2025 sales and revenues of $67.6 billion, up from $64.8 billion in 2024. Profit per share was $18.81, compared with $22.05 in 2024. Enterprise operating cash flow was $11.7 billion, and enterprise cash was $10.0 billion.
The combination is important: revenue growth did not translate into higher per-share profit. Mix, costs, pricing, production levels, restructuring, financing conditions or other items can create that gap. For a downturn investor, the cash-flow figure is a key buffer, while the earnings decline warns that CAT is still cyclical despite its broader portfolio.
Deere: a deeper cyclical reset
Deere’s fiscal-2025 worldwide net sales and revenues were $45.684 billion, down 12%. Net sales were $38.917 billion. Net income attributable to Deere was $5.027 billion, or $18.50 per share, versus $7.100 billion, or $25.62 per share, in fiscal 2024.
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Cash flow is not directly comparable without definitions
Deere reported $5.1 billion of equipment-operations cash flow. Caterpillar reported $11.7 billion of enterprise operating cash flow. The labels and business perimeters differ, so the figures should not be treated as a direct cash-conversion ranking. They do show that each company generated meaningful cash in its latest reported period, with CAT producing the larger absolute amount in the disclosed measure.
3. Services, dealers and financing support
Caterpillar’s services engine
Caterpillar said services revenue reached $24 billion in 2025. Its annual-report highlights describe lifecycle support, e-commerce, connected and autonomous technology, and expanded gas-turbine and generator-set capacity.
Services can include parts, maintenance, repairs, rebuilds, digital monitoring and other support over an asset’s working life. Customers may postpone buying a new machine while continuing to repair and maintain an existing one. That behavior can make aftermarket revenue less volatile than original-equipment sales, although severe utilization declines eventually reduce parts consumption and service work.
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The dealer network adds local inventory, field service and customer relationships. Dealers are independent businesses with their own balance sheets, so their inventory and credit decisions can amplify or cushion factory swings. CAT’s financing arm can support purchases when credit is available, but it also creates exposure to customer defaults, used-equipment values and funding costs.
Deere’s technology and customer relationship
Deere’s Smart Industrial strategy includes an integrated technology stack, including See & Spray, autonomy and Operations Center products. These tools can improve customer productivity and increase the value of staying within Deere’s equipment and software ecosystem.
Technology creates a potential recurring or high-margin layer, but the cited fiscal-2025 release does not provide a comparable services-revenue figure. Investors should therefore avoid assigning CAT’s disclosed $24 billion services number to DE by assumption. Deere’s technology may strengthen retention and long-term economics without eliminating the near-term effect of weak large-agriculture equipment sales.
4. Balance-sheet, financing and credit risk
What Caterpillar discloses
Caterpillar says it targets a mid-A credit rating. Its capital-allocation decisions consider liquidity, cash flow, the economic outlook and credit-market conditions. The company reported $10.0 billion of enterprise cash at the end of 2025.
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Deere’s financial-services sensitivity
Deere’s equipment business is also connected to financing. Farmers and contractors often use loans or leases, making interest rates, credit availability, collateral values and delinquency trends relevant to equipment demand and residual values.
When farm incomes fall, customers may delay replacement even if they need the machine. When used-equipment prices decline, lenders and manufacturers can face higher loss provisions or lower recovery values. These effects can arrive before a factory’s order book fully reflects the downturn. Deere’s concentration means those financial pressures are more closely tied to agricultural conditions than CAT’s are to any single end market.
5. Dividends and buybacks during a downturn
Caterpillar’s 2025 return of capital
Caterpillar deployed $7.9 billion to repurchases and dividends in 2025. That amount demonstrates substantial capacity in the reported year, but it should not be extrapolated automatically into a recession. Management explicitly evaluates dividends and repurchases against liquidity, cash flow, the economic outlook and credit-market conditions.
Buybacks are flexible: the company can slow them when shares are expensive or cash is more valuable on the balance sheet. A dividend is usually treated as a stronger commitment, so investors should examine free-cash-flow coverage, debt maturities and the policy history rather than focusing only on the latest dollar total.
Deere’s fiscal-2025 returns
Deere returned more than $2.8 billion through dividends and repurchases in fiscal 2025 while generating $5.1 billion of equipment-operations cash flow. The lower absolute return reflects the company’s smaller scale and weaker earnings year, not necessarily a permanent difference in payout policy.
For DE, preserving liquidity through the expected fiscal-2026 trough may be more important than maximizing repurchases. If the large-agriculture cycle bottoms as management expects, disciplined capital returns could support per-share recovery. If the downturn deepens, cash retention would take priority for either company.
6. Backlog and demand visibility
What can be inferred for CAT
Caterpillar’s long-duration themes include urbanization, digitalization, electrification and changes in the global energy landscape. Chairman and CEO Joe Creed described these forces as creating sustained demand for the physical systems that underpin modern life. Such themes can support multiyear investment, particularly in power generation, grid-related equipment, infrastructure and resource development.
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What can be inferred for DE
Deere’s technology roadmap can improve visibility when customers adopt precision agriculture, autonomy and connected operations. Adoption may also lengthen the economic life or productivity of existing equipment, which can postpone replacement purchases in the short run while increasing the value of future upgrades.
The immediate visibility issue is the large-agriculture cycle. Management’s statement that fiscal 2026 may be the bottom gives investors a scenario to test, not a confirmed inflection point. Watch dealer inventories, order cancellations, farm incomes, crop prices and financing conditions for evidence that the bottom is forming.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.7. Downturn scenarios: which stock fits each one?
Scenario A: broad global recession
CAT has the better starting position because its revenue sources are more varied. Construction, mining, power and energy, services and financing will all feel pressure, but weakness may be staggered. DE’s agricultural exposure can also be defensive in parts of the cycle because food production continues, yet large-ticket equipment purchases are discretionary and can be deferred when farm economics deteriorate.
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Scenario B: large agriculture bottoms and rebounds
DE may offer greater operating leverage. The company has already absorbed a substantial decline in fiscal-2025 sales and earnings, and management expects fiscal-2026 net income of $4.00-$4.75 billion. A recovery in high-horsepower equipment could lift factory utilization, dealer orders and margins faster than a merely stable market.
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Scenario C: infrastructure and power investment accelerates
CAT is the more direct beneficiary of this mix because its businesses include construction and power and energy, along with related engines, turbines and generator sets. Deere can participate through construction and forestry, but its large-agriculture exposure remains the more important near-term earnings variable in the cited outlook.
Scenario D: credit shock and falling used-equipment values
Both companies face financing and residual-value risk. The better stock depends on which customer base experiences the larger default and utilization shock. CAT’s broader end markets provide diversification, while DE’s farm-credit exposure makes crop economics and land values especially important.
8. Valuation: do not call one stock cheaper without current data
The available disclosures do not include same-day share prices, enterprise values, forward price-to-earnings ratios or normalized mid-cycle earnings. It is therefore not supportable to say CAT is cheaper than DE, or vice versa, from the figures above.
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Before buying, calculate valuation using a consistent date and method:
- Record the purchase-date price. Use the same market close for both stocks.
- Match fiscal periods. Adjust Deere’s fiscal calendar and Caterpillar’s calendar year so the earnings denominator covers comparable months.
- Use more than one earnings base. Compare trailing earnings, management’s next-year guidance where available, and a normalized mid-cycle estimate.
- Check enterprise value. Include debt, cash and financing-business considerations rather than relying only on the equity market capitalization.
- Stress-test the denominator. Model a lower-sales year, margin pressure, higher credit losses and reduced buybacks.
- Compare shareholder yield with balance-sheet needs. A high buyback rate is less valuable if it leaves the company underfunded during the trough.
A stock can be the stronger business for a downturn and still be a poor purchase if its price already discounts that resilience. Conversely, a cyclical stock can be attractive before earnings recover if the market price reflects an excessively severe scenario.
9. Risks that could overturn the resilience preference
- Common-cycle risk: A global recession can reduce construction, mining, energy, agricultural and forestry spending at the same time.
- Dealer inventory: Dealers may destock faster than end-user demand falls, creating a sharp factory order decline.
- Financing losses: Higher defaults, funding costs or lower used-equipment values can offset operating strength.
- Tariffs and trade policy: Changes in duties, sourcing rules or cross-border demand can raise costs and disrupt customer investment plans.
- Commodity and crop prices: Mining projects depend on commodity economics; farm-equipment demand depends heavily on crop profitability and producer confidence.
- Technology adoption: Autonomy, connected equipment and precision systems can create long-term value, but adoption rates and customers’ willingness to pay are uncertain.
- Execution and product mix: A diversified portfolio still requires factories, suppliers and dealers to match demand without excessive inventory or discounting.
- Fiscal-period confusion: Comparing Deere’s fiscal-year results directly with Caterpillar’s calendar-year results can exaggerate or understate the apparent difference.
10. A practical decision framework for investors
Choose CAT when these statements describe your objective
- You want the broader set of industrial end markets in the latest disclosures.
- You value a large, explicitly reported services business as a buffer against new-equipment volatility.
- You prefer stronger absolute operating cash flow and a larger recent capital-return capacity, while accepting that payouts can be adjusted.
- You expect infrastructure, power, energy or resource investment to remain more durable than large-farm equipment demand.
Choose DE when these statements describe your objective
- You believe large agriculture is near its cyclical low and can recover sooner than management’s base case.
- You want exposure to precision agriculture, autonomy and connected-operations adoption.
- You accept greater sensitivity to farm income, crop prices, interest rates and replacement timing.
- You are prepared to tolerate another weak fiscal year in exchange for potentially stronger upside when equipment demand turns.
Questions to answer before either purchase
- What percentage of your portfolio can be exposed to a cyclical industrial company?
- Are you buying for dividend income, a multi-year recovery or a shorter valuation trade?
- What earnings level would make your investment thesis wrong?
- How would you react if CAT’s services remained strong but equipment orders fell, or if DE’s large-agriculture bottom moved into fiscal 2027?
- Have you compared the current share price with normalized earnings rather than only the latest reported profit?
Bottom line
On the evidence currently disclosed, Caterpillar is the better defensive industrial choice for a downturn because its construction, resource, power, energy, services, dealer and financing exposure is broader. Its 2025 revenue growth and $11.7 billion of enterprise operating cash flow reinforce that structural advantage, while the $24 billion services business adds an important recurring element.
Deere is the more concentrated and potentially higher-beta recovery idea. Fiscal-2025 sales and earnings fell sharply, and fiscal-2026 guidance points to another difficult year, but a genuine large-agriculture bottom could produce significant operating leverage. The final decision should combine that business judgment with a same-day valuation and a stress test of cash flow, credit losses and capital returns.
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