Caterpillar (CAT) Q2 2026: EPS +68%, Operating Margin at 20.9%
Most of Caterpillar's 50% operating profit jump is real, but not all of it. Operating profit reached $4,295 million on revenue of $20,543 million, an operating margin of 20.9% that tops the 20.2% full-year peak set in FY2024 and sits far above the 14.5% the company averaged annually across the last ten years. Inside that number is a $392 million tariff refund credited to cost of goods sold after the U.S. Supreme Court struck down IEEPA tariffs in February 2026 — strip it out and margin is 19.0%, still a strong result but a different one. For a machinery cycle that bottomed at a 3.0% annual operating margin in 2016, the question now is not whether the recovery is real but how much room is left above it.
1. Balance Sheet
1-1. Asset Movements
| Item | Dec 31, 2025 ($M) | Jun 30, 2026 ($M) | Change |
|---|---|---|---|
| Cash and cash equivalents | 9,980 | 6,713 | -32.7% |
| Receivables – trade and other | 10,920 | 13,188 | +20.8% |
| Inventories | 18,135 | 20,627 | +13.7% |
| Property, plant and equipment – net | 15,140 | 15,628 | +3.2% |
| Intangible assets | 241 | 420 | +74.3% |
| Goodwill | 5,321 | 5,859 | +10.1% |
| Total assets | 98,585 | 102,609 | +4.1% |
The cash drawdown is a capital allocation choice, not a liquidity problem. Caterpillar spent $6,522 million on share repurchases in the first half against $6,241 million of operating cash flow. The intangibles and goodwill increases both trace to one deal: the February 17, 2026 purchase of RPMGlobal Holdings, an Australian mining software company, for approximately $733 million net of acquired cash. That added $546 million of goodwill and $200 million of finite-lived intangibles to Resource Industries.
Receivables grew faster than inventory, and both grew slower than the 23.2% first-half revenue increase. That is the right shape. Inventories are stated principally on a LIFO basis, which US GAAP permits and IFRS does not — direct inventory and cost-of-sales comparisons against IFRS-reporting peers such as Komatsu will not hold.
