Caterpillar (CAT) Beats Q3 Profit Estimates, but Shares Plunge on Its Outlook

Caterpillar (CAT) reported third-quarter sales and revenues of $20.68 billion, up 17% year on year and roughly in line with forecasts: FactSet’s consensus was $20.76 billion, according to MT Newswires. Adjusted earnings of $7.20 a share beat the $7.08 analysts expected, according to LSEG data cited by Reuters. The shares plunged 9.25% on Thursday to $647.39 after the company kept its full-year sales forecast unchanged, Reuters reported, in what Yahoo Finance said was the stock’s worst day since March 2020.

What stood out

Power for data centers is Caterpillar’s fastest-growing line. Power generation sales, the turbines and large engines that keep server farms running, rose 30% to $3.42 billion, “primarily in data center applications,” the release said. That lifted Power & Energy, its biggest segment, 18% to $8.78 billion.

The rest held up too. Construction equipment sales rose 18% to $7.98 billion, and mining and rail equipment rose 15% to $4.62 billion. “Our third-quarter results reflect the durability of our end markets, with strong order rates and a record backlog,” Chairman and Chief Executive Joe Creed said in the release.

The profit beat had help. Operating profit included $128 million of refunds on tariffs, and manufacturing costs rose because of tariffs and higher freight, the release showed.

The outlook

Caterpillar kept its forecast for 2026 sales growth in the “mid-to-high teens,” while analysts had expected about 18%, Reuters and MT Newswires reported. “For the fourth quarter, we anticipate moderate sales growth versus the prior year,” Chief Financial Officer Kyle Epley said on the call. The company also expects its adjusted operating margin for the year to land near the bottom of its target range, excluding the tariff refunds, according to its slides as reported by Investing.com and MT Newswires.

Part of the drop may have had little to do with the quarter. Yahoo Finance tied it partly to a wider sell-off in stocks linked to the AI build-out, and Reuters said the unchanged forecast raised questions over how long the data-center boom can drive sales of power-generation equipment.

Our take

On paper this was a good quarter, with a record backlog and data-center demand still climbing. But the stock was priced for a raise, and an unchanged forecast with margins near the bottom of the range was not one; the stock now sits 39.2% below its 30 June closing high of $1,064.90. Next quarter, we’ll watch whether margins hold without tariff refunds and whether Caterpillar can add enough factory capacity to turn that backlog into sales.