Caterpillar Posts Adjusted EPS of $7.20; Shares Fall 8.6% Premarket
Key Facts
Caterpillar said adjusted earnings were $7.20 a share in the third quarter of 2026, while its stock fell 8.6% to $652 in premarket trading on Thursday, October 29, according to Dow Jones Newswires. The stock closed at $713.38 on October 28, according to EL7 data. Results showed year-over-year growth in earnings and revenue, but a revenue shortfall against estimates focused investors on the company’s ability to sustain momentum. Chief Executive Joe Creed said the results reflected "the resilience of our end markets, with strong order rates and a record backlog."
Reported earnings were $7.13 a share, compared with $4.88 in the third quarter of 2025, while adjusted earnings rose to $7.20 a share from $4.95, according to Caterpillar’s statement. The operating margin increased to 20.4% from 17.3% a year earlier, and the adjusted operating margin rose to 20.6% from 17.5%. Adjusted measures exclude restructuring costs, making the adjusted margin an indicator of performance after those expenses are excluded. The figures show earnings growth accompanied by improved margins from the year-earlier period. Still, strong profitability did not prevent the stock from falling after revenue came in below FactSet estimates cited by Dow Jones.
Caterpillar attributed the revenue increase mainly to a $2.2 billion rise in sales volume and a $663 million improvement in price realization compared with the third quarter of 2025. The company said higher volume came primarily from increased equipment sales to end users. Sales in the Energy & Power segment rose 18% to $8.784 billion, compared with $7.463 billion a year earlier. The company attributed growth in power generation mainly to turbines and related services, as well as large reciprocating engines used in data center applications. Sales in the Construction Industries segment also rose 18% to $7.983 billion, while Resource Industries sales increased 15% to $4.615 billion.
Data center demand is supporting growth in construction equipment and generators as AI-driven data center expansion continues in the United States. Reuters reported, however, that investor sentiment weakened amid mounting opposition to data centers and calls to slow AI development. The backlog reached a record $78.1 billion in the third quarter, up $6 billion from the previous quarter, according to Reuters. But the pace of growth was slower than at the start of the year, the report said. Caterpillar kept its estimate for 2026 tariff costs unchanged at about $2.2 billion, according to the same source.
Enterprise operating cash flow totaled $4.4 billion during the quarter, and Caterpillar ended the period with enterprise cash of $7.9 billion as of September 30, 2026. The company used $1.2 billion to repurchase shares and $0.7 billion for cash dividends. On its outlook, Caterpillar kept its 2026 revenue growth estimate at the mid-to-high end of the double-digit range, while analysts expected growth of about 18%, according to Reuters. An earlier company disclosure had indicated an expected seasonal decline of more than $1 billion in Construction Industries dealer inventory during the fourth quarter of 2026. This refers to inventory at dealers in that segment, as part of the usual seasonal pattern, not total dealer inventory.
The premarket decline followed a period of pressure on the stock; Reuters said it had fallen more than 20% from August through October 29, as investors looked for signs that revenue and earnings growth driven by data center customers could be sustained. A Reuters report said the stock opened down 10% on October 29, while Dow Jones coverage reported an 8.6% drop to $652 in premarket trading. These are different readings of the stock’s movement at different trading stages on the same day. The company’s stated outlook centers on continued 2026 revenue growth and the expected seasonal decline in Construction Industries dealer inventory in the fourth quarter.