Can Caterpillar’s $72B Backlog Save Its Stock From a 10% Slump?
Caterpillar (NYSE:CAT | CAT Price Prediction) reports third-quarter results before the market opens on October 29. Shares have dropped 15.4% over the past month, so the record backlog now carries the bull case. Record Quarter, Then a Sharp Pullback Last…
Caterpillar (NYSE:CAT | CAT Price Prediction) reports third-quarter results before the market opens on October 29. Shares have dropped 15.4% over the past month, so the record backlog now carries the bull case.
Record Quarter, Then a Sharp Pullback
Last quarter, Caterpillar passed $20 billion in quarterly revenue for the first time. Sales reached $20.54 billion, up 24.0% year over year. Adjusted EPS of $8.17 beat the $6.1974 consensus by 31.83%, and adjusted operating margin expanded 430 basis points to 21.9%.
Management raised its 2026 sales growth outlook to mid- to high-teens. Backlog rose $9 billion sequentially to $72 billion, and 59% of it is expected to ship within 12 months.
The stock gave back those gains. After a 5.6% earnings-day jump, shares sat 8.72% lower thirty days later. They closed at $686.79 on October 23, though they remain up 20.66% year to date.
Wall Street Expects 42% EPS Growth
Consensus calls for big gains against last year’s tariff-pressured results.
| Metric | Consensus | Year-Ago Actual | Implied YoY Growth |
|---|---|---|---|
| Q3 2026 Normalized EPS | $7.0335 | $4.95 | 42.1% |
| Q3 2026 Revenue | $20.69B | $17.64B | 17.3% |
| FY 2026 EPS | $27.3294 | $19.06 | 43.4% |
| FY 2026 Revenue | $79.60B | $67.59B | 17.8% |
Power Capacity and Tariff Costs Will Set the Tone
Power & Energy drives the story. Power generation sales to users grew 72% last quarter on data center demand for large generators and turbines. CEO Joe Creed put it plainly: “It’s not a demand issue right now. It’s just going to be a matter of how fast we can continue to increase production.” I’ll be watching for updates on the resumed 10-megawatt gas engine platform, which targets 1.5 gigawatts of capacity and starts shipping in the fourth quarter. Caterpillar is one of several non-chip suppliers riding the AI data center expansion, a group we profiled in a free report on seven AI infrastructure plays that aren’t chipmakers.
Tariffs come next. Management guided to roughly $600 million in third-quarter tariff costs and about $2.2 billion for the year. The outlook does not include further IEEPA recoveries after $392M lifted second-quarter profit.
Construction also matters. North American construction sales jumped 50%, but management said residential demand remains soft. Caterpillar expects a slight third-quarter dealer inventory build, then a reduction of over $1 billion in the fourth quarter. You should listen for how management frames second-half volume.
Backlog composition rounds out the list. Investors want more detail on how much data center exposure sits inside that $72 billion if tech spending cools off.
A Backlog This Large Needs Proof It Converts
Caterpillar has passed EPS estimates in each of the last four quarters. Beats have not consistently lifted the stock, though. Across five recent beats, the average one-week move was -1.3%.
If management shows the backlog still growing while tariff costs ease, the recent selloff starts to look like a reset. Conversion speed is what I’ll be watching on October 29.
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After two decades of patrolling the dark corners of suburbia as a police officer, Rich Duprey hung up his badge and gun to begin writing full time about stocks and investing. For the past 20 years, he’s been cruising the markets looking for companies to lock up as long-term holdings in a portfolio while writing extensively on the broad sectors of consumer goods, technology, and industrials. Because his experience isn’t from the typical financial analyst track, Rich is able to break down complex topics into understandable and useful action points for the average investor. His writings have appeared on The Motley Fool, InvestorPlace, Yahoo! Finance, Money Morning, and, of course, 24/7 Wall St. He has been featured in both U.S. and international publications, including MarketWatch, Financial Times, Forbes, Fast Company, and USA Today.
