GET DAILY SIGNALSCaterpillar (CAT) Delivers Strong Q3 Results with Record Backlog
Key Takeaways
- Sales and revenues increased 17% year over year to $20.7 billion, coming in slightly above the consensus estimate of about $20.65 billion.
- Adjusted earnings per share reached $7.20, beating the $7.10 analyst expectation, while GAAP diluted earnings per share were $7.13.
- Backlog hit a new record of $78 billion, up roughly 96% from the prior year, driven by robust order growth across all three main segments.
- Adjusted operating profit margin expanded to 20.6% from 17.5%, despite headwinds from tariffs and elevated freight costs.
- Management confirmed its full-year 2026 outlook for sales and revenues growth in the mid-to-high teens range.
- Even with the earnings beat, shares declined sharply in premarket trading amid a broader selloff in artificial intelligence-related stocks.
Why These Results Matter
Caterpillar serves as a key indicator for global industrial trends, given its exposure to construction, mining, and energy equipment that track infrastructure projects, commodity cycles, and power needs. The third-quarter update drew extra attention because investors are monitoring how demand tied to data centers, cloud expansion, and generative AI is supporting the company's power and energy segment. Following a record second quarter, the firm carried strong momentum into this period with a rapidly expanding backlog. The numbers offered insight not just into near-term profitability but also into the staying power of demand across its end markets.
Breaking Down the Quarter
In the third quarter of 2026, CAT posted sales and revenues of $20.7 billion, up 17% from $17.6 billion a year earlier, supported by higher volumes and favorable pricing. GAAP diluted earnings per share rose to $7.13 from $4.88 in the prior-year period, while adjusted profit per share reached $7.20 versus $4.95 previously and topped the roughly $7.10 consensus. Operating profit margin improved to 20.4% from 17.3%, and the adjusted figure climbed to 20.6% from 17.5% after excluding restructuring items. Backlog advanced to a record $78 billion, an increase of about $38 billion or 96% from last year, marking the fourth straight quarter of sequential growth. Enterprise operating cash flow totaled $4.4 billion, with $7.9 billion in enterprise cash on hand at quarter end. The company allocated $2.0 billion to share repurchases and dividends.
Market Reaction
Despite topping revenue and adjusted earnings forecasts, CAT shares dropped more than 10% in premarket trading on the announcement day. The move aligned with a wider pullback in artificial intelligence-linked names after several large technology firms reported results that prompted fresh questions about the pace and sustainability of data-center and semiconductor spending. Because CAT's power generation and turbine sales have gained from AI-related energy demand, the stock moved in tandem with the tech sector even though its own results held up well. The response highlighted how sentiment around AI capital expenditures has become an important variable for the shares, on top of the company's core industrial fundamentals.
Outlook and Items to Watch
Management reiterated its full-year 2026 forecast for sales and revenues growth in the mid-to-high teens, backed by solid order trends and the record backlog. Excluding the positive effect of tariff recoveries under the IEEPA, the company still expects full-year adjusted operating profit margin near the lower end of its target range.
Several areas stand out for monitoring in coming quarters. Capacity expansion in Power & Energy remains a focus, as output of large reciprocating engines and turbines continues to limit growth. Cost pressures from tariffs and higher freight linked to energy prices were flagged as ongoing challenges. Dealer inventories and rental fleet utilization in Construction Industries provided a lift in the third quarter but may contribute less to growth in the fourth quarter after strong prior-year comparisons. Free cash flow from the MP&E segment is projected to finish in the upper half of the annual target range, keeping attention on capital returns and reinvestment. While the demand environment looks resilient, investor views on AI infrastructure spending remain a notable swing factor for the stock.
Integrating AI Tools into Research
I also checked this using Tickeron's AI Screener to see how CAT stacks up against peers in the industrial space. These kinds of tools help surface comparable ideas quickly when reviewing earnings across a sector.
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
CAT sees its Stochastic Oscillator ascending out of oversold territory
On October 28, 2026, the Stochastic Oscillator for CAT moved out of oversold territory and this could be a bullish sign for the stock. Traders may want to buy the stock or buy call options. Tickeron's A.I.dvisor looked at 55 instances where the indicator left the oversold zone. In 41 of the 55 cases the stock moved higher in the following days. This puts the odds of a move higher at over 75%.
Technical Analysis (Indicators)
Bullish Trend Analysis
The RSI Oscillator points to a transition from a downward trend to an upward trend -- in cases where CAT's RSI Indicator exited the oversold zone, 17 of 26 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are 65%.
Following a +3.07% 3-day Advance, the price is estimated to grow further. Considering data from situations where CAT advanced for three days, in 279 of 378 cases, the price rose further within the following month. The odds of a continued upward trend are 74%.
CAT may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
The Aroon Indicator entered an Uptrend today. In 204 of 306 cases where CAT Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 67%.
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on October 08, 2026. You may want to consider selling the stock, shorting the stock, or exploring put options on CAT as a result. In 39 of 73 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are 53%.
The Moving Average Convergence Divergence Histogram (MACD) for CAT turned negative on October 09, 2026. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 44 similar instances when the indicator turned negative. In 27 of the 44 cases the stock turned lower in the days that followed. This puts the odds of success at 61%.
CAT moved below its 50-day moving average on October 07, 2026 date and that indicates a change from an upward trend to a downward trend.
The 10-day moving average for CAT crossed bearishly below the 50-day moving average on October 13, 2026. This indicates that the trend has shifted lower and could be considered a sell signal. In 8 of 14 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are 57%.
The 50-day moving average for CAT moved below the 200-day moving average on October 21, 2026. This could be a long-term bearish signal for the stock as the stock shifts to an downward trend.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where CAT declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 57%.
Fundamental Analysis (Ratings)
The Tickeron SMR rating for this company is 19 (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron PE Growth Rating for this company is 25 (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is 31 (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 80, placing this stock better than average.
The Tickeron Price Growth Rating for this company is 60 (best 1 - 100 worst), indicating steady price growth. CAT’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Seasonality Score of 85 (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Valuation Rating of 91 (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: CAT's P/B Ratio (16.908) is very high in comparison to the industry average of (2.487). P/E Ratio (30.565) is within average values for comparable stocks, (3.008). Projected Growth (PEG Ratio) (1.435) is also within normal values, averaging (1.745). Dividend Yield (0.009) settles around the average of (0.017) among similar stocks. CAT's P/S Ratio (4.892) is very high in comparison to the industry average of (1.128).
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General Information
a manufacturer of mining equipment, diesel and natural gas engines and industrial gas turbines
Industry TrucksConstructionFarmMachinery
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