Caterpillar shares were down 35.1% with dividends in the six months to November 9, 2026, while sales were growing again and the backlog hit a record $78 billion. Microsoft down is the wrong headline for the stock, but it captures the kind of gap investors now have to price: weaker market sentiment against stronger operating data.
Caterpillar and the $78 billion backlog
The company traded at 23.2 times trailing earnings on November 9, 2026, which sat close to its 23.3 average at the last twelve quarter-ends. That leaves the valuation debate resting less on a rerating and more on whether revenue growth can keep up with the backlog.
In the third quarter of fiscal 2026, backlog reached $78 billion, up 96% from a year earlier. For investors, that is the clearest signal that future work is already in the pipeline, even if the share price has not caught up.
Power & Energy drives growth
Most of Caterpillar's revenue growth in fiscal 2025 came from Power & Energy. Revenue in that segment rose to $32.2 billion from $28.9 billion, while Construction Industries and Resource Industries were roughly flat.
That growth pattern tightened in fiscal 2026, when Construction Industries sales rose 18% and Power & Energy sales also rose 18% in the third quarter. In power generation, sales to users rose 75% on demand for turbines and engines used in data centers, and All of Power & Energy grew 36% on a retail measure.
November 9 and fiscal 2026 outlook
Management expects sales growth in the mid- to high teens for fiscal 2026, but only moderate sales growth in the fourth quarter. Revenue had already grown 20.3% over the twelve months to September 2026 after slipping about 1.5% in each of the two prior twelve-month periods.
The open question is how much of the record backlog will turn into revenue at that pace. The company's own scenario work assumes revenue grows each year at 0.85 times its latest twelve-month pace, keeps the P/E at 23.2 times, and values net margin three years out at 70% of today's figure plus 30% of its average from the previous twelve quarter-ends.
Under those assumptions, Caterpillar shares would be worth about 60.8% more three years from the November 9 close. That is the gap investors now have to reconcile with a 35.1% decline over six months and a backlog that has never been larger.
