We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
After a 58% Run in 2025, is CAT Stock Still a Buy in 2026?
Read MoreHide Full Article
Key Takeaways
Caterpillar posted Q3 revenues of $17.6B, up 9.5%, snapping six straight quarters of declines.
CAT's backlog rose $2.4B sequentially to a record $39.9B, improving revenue visibility.
CAT earnings fell 4% in Q3 as costs rose, but the decline slowed sharply from earlier 2025 quarters.
Caterpillar Inc. (CAT - Free Report) shares have delivered a strong 57.9% in the past year, outpacing the manufacturing - construction and mining industry's 55.9% growth. In contrast, the Zacks Industrial Products sector and the S&P 500 posted more modest gains of 5.5% and 18.7%, respectively.
Image Source: Zacks Investment Research
CAT has also outperformed its peers, Komatsu (KMTUY - Free Report) and Terex Corp. (TEX - Free Report) , as shown in the chart below.
Image Source: Zacks Investment Research
From a technical standpoint, Caterpillar has been trading above its 200-day simple moving average (SMA) since May last year and remains above its 50-day SMA, signaling sustained upward momentum. This price action reflects investor confidence in CAT’s operating performance, balance sheet strength and long-term growth prospects.
CAT Trades Above 50-Day & 200-Day SMA
Image Source: Zacks Investment Research
CAT Returns to Revenue Growth in Q3, Posts Record Backlog
Caterpillar’s improving fundamentals supported its stock performance in 2025. In the third quarter of 2025, the company posted revenues of approximately $17.6 billion, marking its highest quarterly number on record. Revenues were up 9.5% as a 10% increase in sales volume and a favorable currency impact of 1% were offset by an unfavorable price realization of 1.3%.
Broad-based volume gains helped CAT break the streak of six straight quarters of revenue declines. Backlog also strengthened, rising sequentially by $2.4 billion to a record $39.9 billion, providing solid visibility into future revenues.
CAT now expects 2025 revenues to be “modestly” higher compared with 2024, an improvement from its prior projection of “slightly” higher revenues.
Caterpillar Shows Improving Earnings Resilience
Cost of sales climbed 16% in the third quarter due to higher manufacturing costs and tariff impacts, resulting in a 4% year-over-year decline in earnings to $4.95 per share. Encouragingly, the pace of earnings decline has slowed meaningfully from the 27% drop in the first quarter of 2025 to a 15.7% decline in the second quarter and the 4% decline reported in the third quarter, highlighting improving operational momentum.
Peers continue to face more pronounced challenges. Terex has seen seven straight quarters of negative organic growth in its Material Processing segment due to subdued demand. The company expects this trend to reflect on its 2025 results. Terex’s Aerial segment has seen eight straight quarters of negative organic growth. Komatsu experienced a decline in volumes within its Construction, Mining & Utility Equipment segment during fiscal 2024, which persisted in the first half of fiscal 2025 (ended Sept. 30, 2025). Komatsu expects demand for construction, mining and utility equipment in fiscal 2025 to remain flat compared with the fiscal 2024 level.
Earnings Estimates Suggest CAT Will Rebound in 2026
Earnings estimates for Caterpillar for both 2025 and 2026 have moved up over the past 60 days. The Zacks Consensus Estimate for CAT’s 2025 earnings indicates a year-over-year decline of 15.57%, with revenues suggesting growth of 2.29%. The earnings estimates for 2026 suggest 18.95% growth, with revenues rising 8.30%.
Image Source: Zacks Investment Research
Caterpillar Stock Trades at a Premium
Caterpillar is currently trading at a forward 12-month price/earnings (P/E) ratio of 30.96X compared with the industry average of 28.51X. Meanwhile, Komatsu and Terex Corp. are trading below the industry at 12.02X and 10.83X, respectively.
Image Source: Zacks Investment Research
CAT Delivers Attractive Returns
Caterpillar’s return on equity (ROE) is 47.16%, higher than the industry’s average of 46.52%. It is also higher than the S&P 500’s return of 32.48%. Meanwhile, Komatsu offers an ROE of 12.41% and Terex an ROE of 15.93%.
Image Source: Zacks Investment Research
Caterpillar Positioned for Long-Term Growth
Over the long term, Caterpillar stands to benefit from increased infrastructure spending under the U.S. Infrastructure Investment and Jobs Act. The global energy transition is also expected to lift demand for critical minerals, strengthening the outlook for CAT’s mining equipment portfolio. Adoption of Caterpillar’s autonomous mining fleet continues to accelerate, driven by productivity, safety and cost-efficiency benefits.
As technology companies establish data centers globally to support their generative AI applications, Caterpillar is witnessing robust order levels for reciprocating engines for data centers. The company is planning to double its output with a multi-year capital investment. Caterpillar recently entered into a long-term strategic collaboration with Hunt Energy Company, L.P., to meet the surging power needs of data centers. The first project is planned for Texas and is expected to serve as the launchpad for a multi-year program to deliver up to one gigawatt of power generation capacity for data centers across North America.
Caterpillar has also entered into an agreement to develop advanced energy optimization solutions for data centers. This collaboration focuses on integrating Vertiv's power distribution and cooling portfolio with Caterpillar’s know-how in power generation and CCHP (Combined Cooling, Heat and Power). CAT’s efforts to grow its aftermarket parts and service-related revenues, which generate high margins, will also aid growth.
How Should Investors Approach CAT Stock Now?
Caterpillar’s premium valuation appears justified given its return to revenue growth, record backlog, improving earnings trajectory and relative strength versus peers in a challenging macro environment. The company’s strong long-term growth drivers, anchored by infrastructure investment, energy-transition trends, data center expansion and a growing high-margin services business, provide clear visibility into future earnings power.
With earnings expected to rebound meaningfully in 2026 and growth prospects strengthening, CAT’s Zacks Rank #2 (Buy) further reinforces our positive outlook.
Image: Bigstock
After a 58% Run in 2025, is CAT Stock Still a Buy in 2026?
Key Takeaways
Caterpillar Inc. (CAT - Free Report) shares have delivered a strong 57.9% in the past year, outpacing the manufacturing - construction and mining industry's 55.9% growth. In contrast, the Zacks Industrial Products sector and the S&P 500 posted more modest gains of 5.5% and 18.7%, respectively.
Image Source: Zacks Investment Research
CAT has also outperformed its peers, Komatsu (KMTUY - Free Report) and Terex Corp. (TEX - Free Report) , as shown in the chart below.
Image Source: Zacks Investment Research
From a technical standpoint, Caterpillar has been trading above its 200-day simple moving average (SMA) since May last year and remains above its 50-day SMA, signaling sustained upward momentum. This price action reflects investor confidence in CAT’s operating performance, balance sheet strength and long-term growth prospects.
CAT Trades Above 50-Day & 200-Day SMA
Image Source: Zacks Investment Research
CAT Returns to Revenue Growth in Q3, Posts Record Backlog
Caterpillar’s improving fundamentals supported its stock performance in 2025. In the third quarter of 2025, the company posted revenues of approximately $17.6 billion, marking its highest quarterly number on record. Revenues were up 9.5% as a 10% increase in sales volume and a favorable currency impact of 1% were offset by an unfavorable price realization of 1.3%.
Broad-based volume gains helped CAT break the streak of six straight quarters of revenue declines. Backlog also strengthened, rising sequentially by $2.4 billion to a record $39.9 billion, providing solid visibility into future revenues.
CAT now expects 2025 revenues to be “modestly” higher compared with 2024, an improvement from its prior projection of “slightly” higher revenues.
Caterpillar Shows Improving Earnings Resilience
Cost of sales climbed 16% in the third quarter due to higher manufacturing costs and tariff impacts, resulting in a 4% year-over-year decline in earnings to $4.95 per share. Encouragingly, the pace of earnings decline has slowed meaningfully from the 27% drop in the first quarter of 2025 to a 15.7% decline in the second quarter and the 4% decline reported in the third quarter, highlighting improving operational momentum.
Peers continue to face more pronounced challenges. Terex has seen seven straight quarters of negative organic growth in its Material Processing segment due to subdued demand. The company expects this trend to reflect on its 2025 results. Terex’s Aerial segment has seen eight straight quarters of negative organic growth.
Komatsu experienced a decline in volumes within its Construction, Mining & Utility Equipment segment during fiscal 2024, which persisted in the first half of fiscal 2025 (ended Sept. 30, 2025). Komatsu expects demand for construction, mining and utility equipment in fiscal 2025 to remain flat compared with the fiscal 2024 level.
Earnings Estimates Suggest CAT Will Rebound in 2026
Earnings estimates for Caterpillar for both 2025 and 2026 have moved up over the past 60 days. The Zacks Consensus Estimate for CAT’s 2025 earnings indicates a year-over-year decline of 15.57%, with revenues suggesting growth of 2.29%. The earnings estimates for 2026 suggest 18.95% growth, with revenues rising 8.30%.
Image Source: Zacks Investment Research
Caterpillar Stock Trades at a Premium
Caterpillar is currently trading at a forward 12-month price/earnings (P/E) ratio of 30.96X compared with the industry average of 28.51X. Meanwhile, Komatsu and Terex Corp. are trading below the industry at 12.02X and 10.83X, respectively.
Image Source: Zacks Investment Research
CAT Delivers Attractive Returns
Caterpillar’s return on equity (ROE) is 47.16%, higher than the industry’s average of 46.52%. It is also higher than the S&P 500’s return of 32.48%. Meanwhile, Komatsu offers an ROE of 12.41% and Terex an ROE of 15.93%.
Image Source: Zacks Investment Research
Caterpillar Positioned for Long-Term Growth
Over the long term, Caterpillar stands to benefit from increased infrastructure spending under the U.S. Infrastructure Investment and Jobs Act. The global energy transition is also expected to lift demand for critical minerals, strengthening the outlook for CAT’s mining equipment portfolio. Adoption of Caterpillar’s autonomous mining fleet continues to accelerate, driven by productivity, safety and cost-efficiency benefits.
As technology companies establish data centers globally to support their generative AI applications, Caterpillar is witnessing robust order levels for reciprocating engines for data centers. The company is planning to double its output with a multi-year capital investment. Caterpillar recently entered into a long-term strategic collaboration with Hunt Energy Company, L.P., to meet the surging power needs of data centers. The first project is planned for Texas and is expected to serve as the launchpad for a multi-year program to deliver up to one gigawatt of power generation capacity for data centers across North America.
Caterpillar has also entered into an agreement to develop advanced energy optimization solutions for data centers. This collaboration focuses on integrating Vertiv's power distribution and cooling portfolio with Caterpillar’s know-how in power generation and CCHP (Combined Cooling, Heat and Power). CAT’s efforts to grow its aftermarket parts and service-related revenues, which generate high margins, will also aid growth.
How Should Investors Approach CAT Stock Now?
Caterpillar’s premium valuation appears justified given its return to revenue growth, record backlog, improving earnings trajectory and relative strength versus peers in a challenging macro environment. The company’s strong long-term growth drivers, anchored by infrastructure investment, energy-transition trends, data center expansion and a growing high-margin services business, provide clear visibility into future earnings power.
With earnings expected to rebound meaningfully in 2026 and growth prospects strengthening, CAT’s Zacks Rank #2 (Buy) further reinforces our positive outlook.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.