Caterpillar gains 51% YTD as record backlog fuels earnings momentum

Caterpillar Inc. reported first-quarter revenue of $17.4 billion, up 22% from a year earlier, as a record backlog and surging demand for data center power equipment drove the stock 51% higher year to date.

"The results reflect strong execution across our segments, with robust order activity continuing into the second quarter," Chief Executive Officer Jim Umpleby said on the earnings call. "We ended the quarter with a record backlog of $62.7 billion."

Adjusted earnings per share rose 30.4% to $5.54, accelerating sharply from the 0.4% increase in the fourth quarter of 2025. The Power & Energy segment posted a 22% sales jump, fueled by electricity generation equipment for data centers including engines, turbines and related services. Cost of sales climbed 26% year over year due to higher manufacturing expenses and tariff-related impacts, pushing adjusted operating margin down slightly to 18% from 18.3%.

Caterpillar now expects full-year revenue growth in the low double digits, up from its prior forecast of about 7%. The company estimated 2026 tariff costs at $2.2 billion to $2.4 billion, lower than the previously expected $2.6 billion. Earnings estimates have risen over the past 60 days, with the consensus calling for 29.4% growth in 2026 and 23.7% in 2027.

The company's return on equity stands at 48.21%, well above the S&P 500's 34.07% and far exceeding Komatsu's 10.83% and Terex's 13.43%. Caterpillar trades at a forward price-to-earnings multiple of 31.9 times, a premium to the industry average of 30.07 times and to Komatsu's 14.88 times and Terex's 11 times.

Management raised its long-term revenue compound annual growth target to 6% to 9% through 2030 from the prior 5% to 7% range. The company aims to boost Construction Industries sales to users by 25% from 2024 levels, triple the number of autonomous trucks in Resource Industries and more than triple Power Generation sales by the end of the decade. Services revenue is targeted to rise to $30 billion by 2030 from $24 billion in 2025.

The guidance raise signals management expects demand from infrastructure spending, mining tied to the energy transition and data center expansion to sustain momentum. Investors will watch upcoming quarterly results for margin progression as tariff costs weigh on the lower end of the company's 15% to 19% adjusted operating margin target range.

This article is for informational purposes only and does not constitute investment advice.