Makes construction and mining machines, engines and gas turbines, sold through dealers and financed by Cat Financial.
The $72bn backlog (+92% y/y) and data-center power demand are genuine: power-generation sales to users rose 72% in 2Q26. But margins sit at a cycle high, and the price needs 14% annual cash-flow growth for ten years against 7.0% in our base case, so upside to downside is only 0.5x.
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.
Caterpillar’s $72bn backlog (+92% y/y) and data-center power demand are genuine, but at 23.1x our FY27E EPS of $31.81 the shares pay for them in full while margins sit at a cycle high. We initiate at Hold with a $695 target.
Answers come from Penmark’s CAT research and the company’s filings, with a source for each claim. Change an assumption and the assistant reruns the report’s valuation.
