Overview
Since the Report − 2.3%
Revenue grew 17.3% year over year, EPS beat the estimate by 1.7%; the stock fell 8.0% in its first reaction.
- RevenueQ3
- $20.68B
- ▲ 17% YoY · 0.6% Above Estimate
- EPSAdjusted
- $7.20
- Estimate $7.08 · 1.7% Beat
Verdict
HOLDCaterpillar posted its highest sales quarter ever at $20.68 billion. Backlog rose to $78 billion, but revenue and profit beat estimates by only 1-2%. The annual outlook was unchanged, management flagged only moderate fourth-quarter growth, and the stock fell 8% intraday.
Close on Report DayOct 29
$656.39▼ 8.0%Report-Day Move
- Market Cap(Today)
- ≈ $295 B
- 1Y Return(At Report)
- + 12%
- P/E(At Today's Price · $26.07 · Trailing 12M)
- 24.6
- Net Margin(Trailing 12M)
- 14.5%
Earnings Summary
In 30 Seconds- Revenue rose 17% to $20.68B but beat estimates by only 0.6%; adjusted EPS of $7.20 was 1.7% above.
- Backlog hit a record $78B, while full-year growth guidance stayed unchanged in the mid-to-high teens.
- The stock fell 8% intraday after management flagged only moderate fourth-quarter growth.
The Numbers
Adjusted Operating Margin
20.6%
Year Ago 17.5% · +3.1 Points
Backlog
$78B
▲ 96% YoY · +$6B in Quarter
Power Generation Sales
$3.42B
▲ 30% YoY · Data Centers
Stock Reaction
−8.0%
Intraday, 12:20 ET; Update This Evening
Quarterly Revenue ($ Billion)
17.64
Q3 25 · $17.6 B
19.13
Q4 25 · $19.1 B · QoQ + 8.5%
17.42
Q1 26 · $17.4 B · QoQ − 9.0%
20.54
Q2 26 · $20.5 B · QoQ + 18.0%
20.68
Q3 26 · $20.7 B · QoQ + 0.7% · YoY + 17.3%
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26
Q4 2026 Company Guidance
- 2026 Sales Growth15% – 19%15%19%
Midpoint 17% · Market Expectation ~18%1 Point Below Estimate ▼
- 2026 Tariff Cost2.2 B
Excluding IEEPA Refunds · Prior Estimate $2.2BFlat
- Q4 2026 Tariff Cost0.6 B
Q4 2025: $0.8B25% Lower YoY ▲
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±14% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Power & Energy$8.78 BShare 38.9%▲ 18.0% YoY
Includes inter-segment sales.
- Construction Industries$7.98 BShare 35.4%▲ 18.0% YoY
- Resource Industries$4.62 BShare 20.5%▲ 15.0% YoY
- Financial Products$1.18 BShare 5.2%▲ 9.0% YoY
Segment revenue before intercompany eliminations.
Key Metrics
Operating Cash Flow (Enterprise)
$4.40 B
Press Release
Share Repurchases
$1.20 B
Press Release
Dividends Paid
$700 M
Press Release
Period-End Cash
$7.90 B
Press Release
Shares are computed over the segment total: $22.6 B. The segment total differs from consolidated revenue ($20.7 B); the company's eliminations and other lines are not in this table. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“Our third quarter results reflect the durability of our end markets with our highest sales quarter ever, strong order rates, and a record backlog.”
- Record Backlog
- Data Center Power Demand
- Capacity Expansion a Priority
Summary and Review
Summary
Caterpillar reported third-quarter sales and revenues of $20.68 billion. That is up 17% from a year ago. The market expected $20.55 billion, so the beat was only 0.6%. Adjusted earnings per share came in at $7.20, beating the $7.08 estimate by 1.7%. Adjusted operating margin rose to 20.6%, up from 17.5% a year ago. All three gates, revenue, profit and outlook, landed in line. A record quarter, but a small surprise.
The stock fell from a $713.38 close to $656.39. The intraday loss was 8%. The company kept its full-year sales growth outlook in the mid-to-high teens. The market expected about 18%, one point above the midpoint of the range. Management flagged only moderate growth for the fourth quarter. The market read this report not as a record, but as a slowdown story. The small revenue beat reinforced that reading.
Score 56, verdict hold. Demand is strong: backlog rose 96% from a year ago to $78 billion. Power generation sales grew 30% on data center demand. On the other hand, the profit beat was small. According to the earnings call, full-year margin will land near the bottom of the target range. This was a good quarter, but not strong enough to carry high expectations. The margin path keeps the score mid-band.
Full Review
Demand at a record, backlog at $78 billion.
Backlog reached $78 billion at quarter end. That is up 96% from a year ago. Compared with $72 billion in the second quarter, it grew by $6 billion, or 8%. Backlog growth has slowed since early in the year, but the direction is still up. Power & Energy sales were $8.78 billion, up 18% from a year ago. Within that, power generation grew 30% to $3.42 billion. Data centers are driving engine and turbine demand. The company is expanding large reciprocating engine and turbine production. Construction Industries grew 18% to $7.98 billion, and Resource Industries grew 15% to $4.62 billion. First shipments of the 10-megawatt gas engine, which we flagged last quarter, have not yet been confirmed in the release.
Margin expanded, but the beat was small.
Adjusted operating margin was 20.6%. That is 3.1 points wider than 17.5% a year ago. But it is 1.3 points narrower than 21.9% in the second quarter. Operating profit includes $128 million of IEEPA tariff refunds. Excluding that refund, margin falls to about 20.0%. Construction Industries margin was 22.9%, 2.5 points above a year ago. Resource Industries margin was flat at 13.5%. Adjusted earnings per share were $7.20, up 45% from a year ago. That is strong growth, but it beat the $7.08 estimate by only 1.7%. For a stock priced for a record year, that gap was not enough. Still, the annual margin expansion shows price and volume working together.
Outlook unchanged, the final quarter slows.
The company kept its 2026 sales growth outlook in the mid-to-high teens, a range of 15-19%. The midpoint of 17% is one point below the roughly 18% the market expected. Management flagged moderate growth and a higher margin for the fourth quarter. Full-year tariff cost stayed at $2.2 billion. So the estimate we tracked last quarter held. Fourth-quarter tariff cost is about $600 million, $200 million lower than a year ago. According to the earnings call, construction dealers will cut about $1.6 billion of inventory in the fourth quarter. Last quarter that cut was expected to start in the third quarter; it did not, and the burden moved to the final quarter. Dealers will still end the year with more inventory than last year, which the company frames as preparation for 2027 demand.
Cash is strong, $2 billion to shareholders.
Enterprise operating cash flow was $4.4 billion in the third quarter. The company bought back $1.2 billion of stock and paid $0.7 billion in dividends. Total distributions were $2.0 billion. Period-end cash rose to $7.9 billion, up from $6.7 billion at the end of the second quarter. The average analyst price target is $933.64, covering 29 analysts. That implies 42% upside from today's price. However, many targets were being cut before the report. The stock sits about 39% below its 52-week high of $1,073. So this drop is part of a months-long repricing, not a single bad day. For more on capital returns, see our share buybacks guide.
The one line to watch next quarter.
Next quarter, watch one line: backlog. If backlog stays above $78 billion, the fourth-quarter dealer destocking means seasonality, not weak demand. In that case today's drop reads as an overreaction. If backlog falls below $78 billion, the market's slowdown reading today proves right. The second measure is adjusted operating margin: it needs to rise above the year-ago level in the fourth quarter. The 2027 outlook due in late January should be read alongside these two numbers. Double-digit growth guidance would mean the backlog reflects lasting demand. For a step-by-step approach, our how to read earnings day guide helps.
Looking Ahead
Strengths and Risks
5 Strengths · 5 RisksStrengths
5- Backlog rose 96% from a year ago to $78 billion and grew $6 billion in the quarter.
- Power generation sales rose 30% to $3.42 billion on data center demand.
- Adjusted operating margin widened 3.1 points from a year ago to 20.6%.
- The full-year tariff cost estimate held steady at $2.2 billion.
- The company returned $2.0 billion to shareholders through buybacks and dividends in the quarter.
Risks
5- Revenue and profit beat estimates by only 0.6% and 1.7%, not enough for a stock priced for a record.
- The midpoint of full-year growth guidance sits about one point below market expectations.
- Construction dealer destocking in the fourth quarter may weigh on sales.
- Adjusted operating margin narrowed 1.3 points from the second quarter.
- Resource Industries margin was flat at 13.5%, with tariff and freight costs persisting.
What to Watch
4- Late January 2027Fourth-quarter earnings and the first outlook for 2027.
- Q4 2026Construction dealers are expected to cut about $1.6 billion of inventory seasonally.
- Q4 2026First shipments of the 10-megawatt gas engine platform are expected to begin.
- Year-end 2026Whether IEEPA tariff refunds continue will be watched.
Upcoming Earnings
To Understand This