Construction equipment company Caterpillar (NYSE: CAT) announced better-than-expected revenue in Q2 CY2026, with sales up 24% year on year to $20.54 billion. Its non-GAAP profit of $8.17 per share was 31.8% above analysts’ consensus estimates.

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"This is the first time in company history that we have generated over $20 billion in sales and revenues in a single quarter," said Caterpillar Chairman and CEO Joe Creed.

Company Overview

With its iconic yellow machinery working on construction sites, Caterpillar (NYSE: CAT) manufactures construction equipment like bulldozers, excavators, and parts and maintenance services.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Caterpillar grew its sales at a solid 10.2% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers, a helpful starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Caterpillar’s recent performance shows its demand has slowed as its annualized revenue growth of 6.1% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs.

This quarter, Caterpillar reported robust year-on-year revenue growth of 24%, and its $20.54 billion of revenue topped Wall Street estimates by 8.4%.

Looking ahead, sell-side analysts expect revenue to grow 6.7% over the next 12 months, similar to its two-year rate. This projection is underwhelming and suggests its newer products and services will not accelerate its top-line performance yet. At least the company is tracking well in other measures of financial health.

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Operating Margin

Caterpillar has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 17.3%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Analyzing the trend in its profitability, Caterpillar’s operating margin rose by 4.4 percentage points over the last five years, as its sales growth gave it operating leverage. Its expansion shows it’s one of the better Construction Machinery companies as most peers saw their margins plummet.

This quarter, Caterpillar generated an operating margin profit margin of 20.9%, up 3.6 percentage points year on year. Since its gross margin expanded more than its operating margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Caterpillar’s EPS grew at 21.7% compounded annual growth rate over the last five years, higher than its 10.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

We can take a deeper look into Caterpillar’s earnings to better understand the drivers of its performance. As we mentioned earlier, Caterpillar’s operating margin expanded by 4.4 percentage points over the last five years. On top of that, its share count shrank by 16.2%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Caterpillar, its two-year annual EPS growth of 3.3% was lower than its five-year trend. This wasn’t great, but at least the company was successful in other measures of financial health.

In Q2, Caterpillar reported adjusted EPS of $8.17, up from $4.72 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Caterpillar’s full-year EPS to grow 12.1% from $23.82 to $26.71.

Key Takeaways from Caterpillar’s Q2 Results

It was good to see Caterpillar beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 10.7% to $919.01 immediately following the results.

Sure, Caterpillar had a solid quarter, but if we look at the bigger picture, is this stock a buy? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).