How Much Downside Is Left In Caterpillar Stock?
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Caterpillar (CAT) stock lost 22% in the month to November 11, while the S&P 500 slipped 2.3%. That leaves the shares 43.3% below their highest close of the past year, set on June 30. If the rest of the market falls as well, how hard could that hit Caterpillar, judging by past market shocks?
How Far Has Caterpillar Fallen In Market Shocks?
Caterpillar stock dropped an average of 23.4% during the 15 market shocks since 2007, compared with a 15.8% decline for the S&P 500 over the same windows. The stock fell further than the index during most of those shocks. The largest of those declines came during the 2008-2009 financial crisis, when Caterpillar lost 69% and the S&P 500 lost 53%.
The median recovery took 2.5 months from the low. Four of those recoveries stretched beyond a year, however, with the slowest taking 37.3 months following the summer 2007 credit crunch. The stock returned to its earlier peak after every one of those shocks.
Caterpillar’s Sales Are Growing Faster Than A Year Ago
Caterpillar’s revenue rose 20.3% in the twelve months to September 30, 2026, following a 1.5% decline in the twelve months before. In fiscal 2025, Power & Energy revenue rose 11.6%, while Construction Industries revenue slipped 1.6%. In the third quarter of 2026, management said Construction Industries sales grew 18% to $8 billion and Power & Energy sales grew 18% to $8.8 billion.
Caterpillar also kept more of each dollar of sales. Its operating margin reached 18.3% over the latest twelve months, up from 17.7% a year earlier. The company holds more debt than it did, however, carrying $45.2 billion on September 30, 2026, compared with $41.5 billion a year earlier.
Where Is Caterpillar Under Pressure Now?
On its October 29 earnings call, management said it expects dealers to cut their inventory by roughly $1.6 billion in the fourth quarter. Management called this the typical seasonal cut, though it is larger than the $600 million cut a year earlier, and management put the year-over-year hit to fourth-quarter sales volume.
Management also pointed to costs. The company expects tariff costs of around $2.2 billion for 2026, excluding the tariff recoveries it has received so far. Those tariffs, higher freight costs and spending on new capacity are why management expects its adjusted operating margin for the year, leaving out tariff recoveries, to sit near the bottom of its target range.
Mining is lagging too. In Resource Industries, sales to users rose 4% in the third quarter, below what management expected, and sales into mining were lower because of delays in shipping and commissioning. Management expects the commissioning delays to catch up in the fourth quarter.
Construction Industries sales for the fourth quarter will be the figure to watch when Caterpillar reports, expected in February 2027. Management expects those sales to be similar to a year earlier.
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