Caterpillar Q3 earnings preview: Sales and tariff headwinds in focus

[Caterpillar To Shed 20,000 Jobs Worldwide As Profits Fall]
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Caterpillar (NYSE:CAT [https://seekingalpha.com/symbol/CAT]) is set to announce third quarter earnings on Tuesday, and investors will focus on sales to see how the company navigates tariff headwinds amid macroeconomic uncertainty.

Wall Street expects the construction and mining equipment maker to post EPS of $4.52, implying a decline of 12.6%, while revenue is expected to increase 4.2% to $16.77 billion during the quarter.

During its Q2 earnings call, CFO Andrew R. J. Bonfield highlighted [https://seekingalpha.com/news/4478986-caterpillar-anticipates-record-37_5b-backlog-and-targets-higher-2025-sales-despite-1_5b] that the company expects the net impact of around $1.3 billion to $1.5 billion from incremental tariffs for 2025.

Despite tariff headwinds, Oppenheimer rated CAT as Sector Outperform, saying that “the company is supported by construction data, stable mining, and traction across the E&T portfolio, helping margin recovery and earnings growth in 2026.”

RBC Capital Markets initiated [https://seekingalpha.com/news/4506948-caterpillar-rated-sector-perform-in-new-coverage-at-rbc-capital] coverage of Caterpillar (NYSE:CAT [https://seekingalpha.com/symbol/CAT]) with a Sector Perform rating, highlighting that the industrial giant is well-positioned across its core markets.

The brokerage firm forecasts 2026 adjusted EPS of $20.72, applying a 27 times multiple, to reach its $560 target. The firm projects flat revenue for 2025 as tariffs weigh on margins by an estimated $1.5 billion to $1.8 billion.

“Data centers continue to be a key growth driver, as Caterpillar’s (NYSE:CAT [https://seekingalpha.com/symbol/CAT]) power generation business, now 12% of total sales, has grown roughly 22% annually since 2022, supported by surging demand for backup and primary power solutions tied to cloud and AI infrastructure,” noted RBC Capital analyst Sabahat Khan.

Seeking Alpha's Quant [https://seekingalpha.com/symbol/CAT/ratings/quant-ratings#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews] and analysts recommended the stock as a Hold, while the Wall Street analysts [https://seekingalpha.com/symbol/CAT/ratings/sell-side-ratings#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews] see the company as a Buy.

Over the last two years, CAT has beaten EPS estimates [https://seekingalpha.com/symbol/CAT/earnings/eps-surprise-summary] 63% of the time and has beaten revenue estimates 38% of the time.

Over the last three months, EPS estimates have seen three upward revisions [https://seekingalpha.com/symbol/CAT/earnings/revisions] versus 14 downward revisions, while revenue estimates have seen eight upward revisions against one downward move.

Since the start of the year, CAT shares have risen over 45%, compared to nearly 17% rise in the broader S&P 500 index (SP500 [https://seekingalpha.com/symbol/SP500#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews]).

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