Updates · Earnings preview
Caterpillar 3Q26 preview: power carries the quarter, but the destock caps the upside
We expect 3Q26 adjusted EPS of $6.93, 1% below the $7.03 consensus, on revenue of $20.4bn. Hold and $695 target unchanged. This is a sample quarterly update with illustrative figures.
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Key takeaways
- We expect 3Q26 adjusted EPS of $6.93 against the $7.03 consensus, on revenue of $20.4bn
- Power & Energy grows 31% to $8.2bn at a 24% margin and reaches 42% of segment sales
- Construction sales fall 4% as dealers start a destock we expect to exceed $1bn by year end
- Hold and $695 target unchanged, with no changes to FY26E to FY28E estimates
3Q26 forecast
| Line | Our estimate | Consensus | Difference |
|---|---|---|---|
| Revenue | $20.4bn | $20.6bn | −1.0% |
| EPS | $6.93 | $7.03 | −1.4% |
Investment thesis
The quarter should be in line; the debate is 2027. Our FY28E EPS of $35.57 is 9% below consensus because we assume margins stay near 20% rather than expanding as data-center volumes grow.
Valuation
Our $695 target is unchanged at 20x next-twelve-months adjusted EPS of $34.82. A beat on Power & Energy orders would lift it to about $740; a miss with a deeper destock would cut it to about $640.
Our estimates
| Line | FY26E | FY27E | FY28E |
|---|---|---|---|
| Revenue | $79.4bn | $90.5bn | $97.0bn |
| EPS | $27.47 | $31.81 | $35.57 |
| Consensus | $27.33 | $32.59 | $39.21 |
| Ours vs consensus | +0.5% | −2.4% | −9.3% |
Risks to our view
- A pause in data-center capital spending
- A construction destock larger than $1bn
- A FY26 margin guide below the bottom of the range
- Upside risk: Power & Energy book-to-bill above 1.4x for two quarters