- Company name
- Caterpillar
- Sector
- Construction & mining machinery and power systems
- About
- Caterpillar makes construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. It has three main segments: Power & Energy, Construction Industries and Resource Industries. Its Financial Products segment, mainly Cat Financial, lends to customers and dealers. It sells through a worldwide network of dealers, which also give parts and service. Sales and revenues were $67.6 billion in 2025 and $58.6 billion in the first nine months of 2026. In Q3 2026, Power & Energy was the largest segment, with sales of $8.78 billion, and sales for power generation, mainly turbines and large engines for data centers, rose 30%. Caterpillar is based in Irving, Texas.
- Thesis
- The market prices Caterpillar for the risk that its record results are the top of a cycle. Sales and revenues rose 17% to $20.7 billion in Q3 2026, and adjusted profit per share rose to $7.20 from $4.95. Much of the growth came from data centers, which buy turbines and large engines for power. Investors doubt that this spending stays high, and the stock fell by about half from its high on June 30, 2026. It fell 9.3% on October 29, 2026, the day of the Q3 report, when the company guided only moderate sales growth for Q4 2026. Construction Industries expects similar Q4 sales with lower volume, because dealers plan to cut inventories by about $1.6 billion. Tariff costs of about $2.2 billion in 2026 also lower margins. For the gap to close, three things must be true. The backlog of $78.1 billion at September 30, 2026 must turn into sales as new capacity starts, with steady orders in 2027. The Power & Energy margin must stay near the 24.4% of Q3 2026 as turbine and engine output grows. Caterpillar must keep its plan to return substantially all MP&E free cash flow to shareholders; this cash flow was $9.53 billion in the first nine months of 2026. The Q4 2026 report and the 2027 outlook, expected in late January 2027, are the next test. If orders and margins hold, the gap can close over the next four to six quarters. The main reason it may not close is a fall in data center or mining orders, which can turn the cycle down.
- Risks
- Demand for Caterpillar's machines and engines moves with the economy, construction, mining and energy spending. Power generation sales rose 30% in Q3 2026, mainly for data centers. If data center or mining investment slows, orders, sales and margins can fall quickly.
Caterpillar expects tariff costs of about $2.2 billion in 2026, without the IEEPA recoveries. About half of these costs fall on Construction Industries. Higher tariffs or new trade limits can lower margins more.
Manufacturing costs rise as Caterpillar adds capacity for turbines and engines. In Q3 2026, higher material costs, including tariffs, cost Resource Industries $208 million. Higher costs can offset price increases.
Cat Financial had debt of $34.6 billion at September 30, 2026 to fund loans to customers and dealers. A weak economy can raise credit losses and funding costs.
- Balance sheet
- Cash: $7.1B
Debt: $10.7B
Net debt: $3.5B
Interest cover: 29×
Undrawn credit line: $2.9B
Debt due within 12 months: $36M
Caterpillar has two parts with different funding. Machinery, Power & Energy (MP&E) funds itself mainly with cash flow and long-term notes. The figures here are for MP&E. At September 30, 2026, MP&E had cash of $7.10 billion, $1.57 billion of liquid securities and debt of $10.65 billion, of which $36 million is due within one year. Cat Financial lends to customers and dealers. It had debt of $34.55 billion against its finance receivables, including $4.86 billion of short-term borrowings and $8.14 billion of long-term debt due within one year. Total debt was $45.20 billion. Of the $11.5 billion of committed credit facilities, $2.875 billion is available to MP&E. Fitch and Moody's give Caterpillar a high-A rating, and S&P gives it a mid-A rating. Interest cover is consolidated operating profit divided by interest expense outside Financial Products for the first nine months of 2026. MP&E free cash flow was $9.53 billion in the first nine months of 2026. In that period, Caterpillar paid $7.75 billion for its own shares and $2.15 billion of dividends, and $7.19 billion of buyback authorization was left. On October 31, 2026, it paid $1.24 billion in cash for the Fabick dealer.
As of 2026-09-30.
- Checkpoints
- Jan 28, 2027 (estimate): Q4 2026 results and 2027 outlook. Pending. Watch: A backlog at or above $78.1 billion and a 2027 outlook for higher sales with stable margins pass; a lower backlog or an outlook for lower sales fail.
- Recent events
- 2026-10-31: Caterpillar completed the purchase of John Fabick Tractor Company, a Caterpillar dealer for more than 100 years in Missouri, Illinois, Wisconsin and Michigan. It paid $1.24 billion in cash at closing and expects to pay about $165 million more later.
2026-10-29: Caterpillar reported Q3 2026 results. Sales and revenues rose 17% to $20.7 billion, with higher volume of $2.2 billion and better prices of $663 million. Adjusted profit per share was $7.20, up from $4.95, and the adjusted operating margin was 20.6%. The backlog rose by $6.0 billion in the quarter to $78.1 billion. Caterpillar bought back $1.2 billion of shares. It expects moderate sales growth in Q4 2026 and still expects sales and revenues growth in the mid-to-high teens for 2026.
2026-10-15: Caterpillar said that Denise Johnson, group president of Resource Industries, retires and that Derrick York, president of Solar Turbines, takes the role on November 1, 2026.
2026-08-27: Caterpillar signed a new $3.5 billion 364-day credit facility and extended its $3.0 billion three-year facility to August 2029 and its $5.0 billion five-year facility to August 2031.
2026-08-04: Caterpillar reported Q2 2026 results. Sales and revenues rose 24% to $20.5 billion, more than $20 billion in one quarter for the first time. Adjusted profit per share was $8.17, up from $4.72.
2026-06-10: Caterpillar raised its quarterly dividend by 8% to $1.63 per share from $1.51.
2026-04-30: Caterpillar reported Q1 2026 results. Sales and revenues rose 22% to $17.4 billion, and adjusted profit per share was $5.54. It bought back $5.0 billion of shares in the quarter.
2026-02-20: The U.S. Supreme Court ruled that the tariffs under the International Emergency Economic Powers Act (IEEPA) were not authorized. Caterpillar says that these tariffs cost it about $1.0 billion, and it recorded $520 million of recoveries in the first nine months of 2026.
2026-02-17: Caterpillar completed the purchase of RPMGlobal, an Australian mining software company, for about $733 million.
2026-01-29: Caterpillar reported 2025 results. Sales and revenues rose 4% to a record $67.6 billion, but adjusted profit per share fell to $19.06 from $21.90 because of tariffs and lower prices. Joe Creed, the CEO, became Chairman on April 1, 2026.