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Shares of Caterpillar (NYSE: CAT) were down about 4% on Friday after the construction equipment manufacturer expressed new concerns about the impact of tariffs on its financials.

In an SEC filing submitted Thursday, August 28, the company provided an update on the estimated impact of tariffs in light of additional clarifications and tariffs since it released second quarter earnings on August 5.

Ultimately, the impact will be more than originally projected and will effect its profit margins.

“Based on the changes and clarifications announced since August 5, 2025 and expected to be in place as of August 31, 2025, the company now expects the net impact from incremental tariffs introduced in 2025 will be between approximately $500 million to $600 million for the third quarter and approximately $1.5 to $1.8 billion for 2025,” the SEC filing stated.

In its August 5 earnings report, Caterpillar targeted a $400 million to $500 million impact from tariffs in Q3 and a $1.3 billion to $1.5 billion impact for the full fiscal year.

Operating margin near the bottom of previous range

The updated tariff impacts will not affect previous projections for sales and revenue. However, Caterpillar officials do anticipate that the operating profit margin will now be near the bottom of the target range. Previously, it was expected to be in the bottom half of the range.

If Caterpillar makes about the same net sales as 2024, which was $64.8 billion, then the operating margin range would be 16% to 20%. Thus, near the bottom would be 16%. If it makes slightly more, which it projects to, then the range could be 17% to 21% or 18% to 22%. Either way, the margin will be near the bottom of the range.

In Q2, the operating margin was 17.3%, down from 20.9% in the same quarter a year ago.

The filing notes that the company is taking actions to mitigate and reduce the effects of tariffs, adding that trade and tariff negotiations continue to be fluid. Management will provide more details when it releases third quarter earnings on October 29.

Is Caterpillar stock a buy?

This updated guidance is another hit for Caterpillar after it missed earnings estimates in the second quarter. The manufacturer of tractors and other large construction equipment saw its adjusted profit per share fall 21% in Q2 to $4.72 per share. Analysts were anticipating earnings of $4.88 per share. GAAP earnings were off 16% to $4.62 per share.

Revenue dropped 1% year-over-year in Q2 to $16.6 billion. That beat estimates of $16.4 billion.

Caterpillar stock is currently trading at around $415 per share, up about 15% YTD. Analysts are generally bullish on Caterpillar stock, as it has a median price target of $448.50 per share, which suggests 8% upside. But targets are all over the place.

Morgan Stanley lowered its price target to $350 per share and maintained an underperform rating on the tariff news. Yet, Baird rates the stock as outperform, while lowering its target by $5 to $495 per share – more than $100 difference from Morgan Stanley. Also, Oppenheimer lowered its target by $13 but still has a price target of $483 per share and a buy rating.

With such a wide range of projections and tariff headwinds, investors should be wary and do some additional research before making any moves.

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