Caterpillar Inc. CAT is expected to deliver year-over-year improvement in both earnings and revenues when it reports first-quarter 2026 results on April 30, before the opening bell. This suggests the second quarter of earnings growth for the company after five quarters of declines.
The Zacks Consensus Estimate for CAT’s first-quarter 2026 earnings has moved up 2.5% over the past 60 days to $4.55 per share, which implies 7% growth from the year-ago actual.
The consensus estimate for Caterpillar’s revenues is pegged at $16.42 billion for the quarter, indicating 15.2% year-over-year growth. This suggests that CAT will maintain the momentum of positive revenue growth for the third consecutive quarter after six quarters of declines.
Caterpillar’s Earnings Surprise History
CAT’s earnings outpaced the Zacks Consensus Estimate in two of the trailing four quarters while missing twice, the average surprise being 3.89%. This is depicted in the following chart.
What the Zacks Model Unveils for CAT Stock
Our proven model does not conclusively predict an earnings beat for Caterpillar this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.
Earnings ESP: CAT has an Earnings ESP of -0.11%. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Likely to Have Shaped Caterpillar’s Q1 Performance
The broader manufacturing environment remained supportive during the quarter, as reflected in the Institute for Supply Management reporting readings above 50 (denoting expansion). The index was 52.6% in January, 52.4% in February and 52.7% reading in March. The New Orders Index also remained above 50 throughout this period. This is likely to have reflected in Caterpillar’s order volumes.
CAT’s substantial backlog of $51.2 billion at the beginning of the quarter, along with ongoing strength in aftermarket parts and service-related revenues, is likely to have supported its top line. Volume gains across all segments are projected to have been the primary driver. Overall, we expect volumes contributing 10.4% to revenue growth, supplemented by 4.2% from pricing and a 0.2% favorable currency impact.
However, tariffs, estimated to be around $800 million, are likely to have driven a 18% spike in the cost of sales. We anticipate a 4% increase in selling, general and administrative expenses and an 8% rise in research and development costs.
Factoring in the expected growth in revenues somewhat offset by higher costs, our model projects a 13.4% year-over-year decrease in adjusted operating income to $2.96 billion. We expect the operating margin to be 18.2% in the first quarter of 2026, implying a slight contraction from the 18.3% reported in the first quarter of 2025.
Our Projections for CAT's Segments in Q1
Our model projects the Resource Industries segment's external sales at $2.94 billion for the quarter, indicating a 4.3% year-over-year rise. We expect a 4.1% rise in volume for the segment, a positive 0.2% impact from currency translation while pricing is expected to have been flat.
The segment is expected to report an operating profit of $607 million, suggesting 1.8% year-over-year growth. The segment’s operating margin is projected to be 20.7%, slightly lower than the 21.2% reported in first-quarter 2025.
The Construction Industries segment’s external sales are projected at $5.57 billion, indicating growth of 8.2% from the year-ago quarter’s actual. We expect a 3.5% improvement in volumes, a 4.6% impact of pricing and a 0.1% gain from currency translation.
The segment’s operating profit is projected to be $1.32 billion, indicating year-over-year growth of 29%. We project the segment’s margins at 23.7%. higher than the year-ago quarter’s 19.9%.
For the Power & Energy segment, we expect external sales to be $6.82 billion, suggesting a 26.4% rise from the year-ago quarter’s actual. Volume growth is projected to be 20.3% on improved demand across all sectors, Power Generation, Oil and Gas, Industrial and Transportation. Pricing is expected to contribute 6% to the segment’s sales growth, while currency is expected to have had a positive 0.2% impact.
Our estimate for the segment’s operating profit is $1.18 billion for the first quarter of 2026, suggesting a 0.6% increase year over year. The segment’s operating profit is pegged at $1.7 billion (up 30% year over year) with an operating margin projected at 25%, slightly higher than the 24.3% reported in the first quarter of 2025.
Caterpillar’s Price Performance & Valuation
CAT has gained 169.9% in the past year compared with its industry’s 149.1% growth. It has also outperformed the broader Zacks Industrial Products sector’s 37.4% growth and the S&P 500’s climb of 33.6%. CAT stock has outpaced other players in the industry, like Terex TEX, Astec Industries ASTE and Komatsu KMTUY. In the past year, Terex, Astec and Komatsu have gained 74.9%, 57% and 51.4%, respectively.
Image Source: Zacks Investment Research
Caterpillar is currently trading at a forward 12-month P/E of 33.82X, at a premium compared with the industry’s 32.16X.
Image Source: Zacks Investment Research
The stock is also not cheap when compared with Terex, Astec and Komatsu, all of which are trading at 12.24X, 14.84X and 16.17X, respectively. Notably, Terex, Astec and Komatsu are trading below the industry’s average.
Investment Thesis on CAT
Caterpillar’s long-term outlook remains compelling. The company is well-positioned to benefit from global infrastructure spending, urbanization trends and the ongoing transition toward cleaner energy systems. Its strong brand and market presence, and diversified business model position it for improved performance going forward. Expanding its service revenues, which generate higher margins, provides a solid foundation for sustained growth. Additionally, Caterpillar’s robust balance sheet supports continued investment in innovation, alongside shareholder returns through dividends and buybacks. While tariffs are expected to have raised costs, volume growth, as well as CAT’s pricing and cost-cutting efforts, can help counter the impacts.
How Should You Play Caterpillar Stock Pre-Q1 Earnings?
CAT's performance has always been closely watched by investors, as it serves as a key economic barometer for the sector. Caterpillar’s first-quarter revenues are expected to reflect the improvement in volumes in all of its segments. Earnings are expected to have increased owing to higher revenues and cost-control efforts despite higher costs, including tariffs.
No matter how the upcoming quarterly results play out, investors who already own CAT should retain its shares in their portfolios to benefit from its solid long-term fundamentals. However, given its premium valuation and potential margin pressure, new investors can wait for a better entry point.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Caterpillar Inc. (CAT): Free Stock Analysis Report
Astec Industries, Inc. (ASTE): Free Stock Analysis Report
Terex Corporation (TEX): Free Stock Analysis Report
Komatsu Ltd. (KMTUY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).