At about 30 times next year's profit, the price assumes today's record margins and data-center power demand both hold. I expect earnings to level off near $28 a share, which supports roughly $710.
Key points
- $710 twelve-month target, 13% below the $815.63 price.
- 30 times the price over my 2027 profit estimate of $27.39 a share, for a machinery maker.
- $392 million of one-off tariff refunds lifted the June quarter's 20.9% operating margin.
The call
The price requires record profits to keep compounding. At $815.63 the stock trades near 31 times my 2026 profit of $26.06 a share. That multiple needs power demand and construction both to keep climbing after this year's 17% sales jump.
I expect profits to level off. The June margin leaned on tariff refunds, and dealers added $400 million of construction inventory. Rental fleets were also loading up. Those are one-time lifts. Management says power sales sit in a capacity-constrained market, but rivals are adding supply.
Revenue and operating margin by quarter ($ billions)- Revenue ($B)
- Operating margin (%)
Source: SEC XBRL filings, quarters to June 30, 2026
Valuation
| Item | Figure |
|---|
| 2026 sales growth (guidance: mid-to-high teens) | 17% |
| 2027 sales, 7% growth | $84.6 billion |
| 2027 operating margin | 19% |
| 2027 profit per share | $27.39 |
| Forward profit per share at October 2027 | $28.42 |
| Multiple of 25 times gives target | $710 |
Twenty-five times is above a normal machinery multiple. I pay up because power and services are growing and the backlog is $72.1 billion. At 30 times the stock would be fair, so the loss is limited if I am wrong. At 20 times it is $568. The skew points down, so I rate it a sell.
Target price by earnings multiple ($ per share)Own arithmetic on $28.42 forward EPS estimate; price $815.63 on Oct 7, 2026
Risks
- Power demand keeps outrunning supply and margins stay near 21%. Watch backlog and the delivery schedules extending into 2029.
- Buybacks shrink the share count faster than I assume. About $8.4 billion of authorization remains; watch quarterly share counts.
- Tariff refunds recur and add to profit. Watch the Q3 call for further recoveries.
What would change my mind
Two more quarters of margins above 20% with no refund help, and a backlog still rising, would lift my profit estimate above $32 a share.