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Caterpillar’s Earnings Are Good and Sales Top Estimates. But the Stock Falls.

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Caterpillar’s earnings and sales in the second quarter beat Wall Street expectations.

Bernd Lauter / AFP via Getty Images


Caterpillar

reported second-quarter numbers that beat Wall Street estimates. The stock, however, was falling early Tuesday.


Caterpillar

(ticker: CAT) reported $3.18 in adjusted per-share earnings from $14.2 billion in sales.

Wall Street was looking for about $3.03 in adjusted per-share earnings from about $14 billion in sales. In the first quarter,


Caterpillar

reported a profit of $2.87 a share from sales of $12.9 billion.

It’s an earnings “beat,” but Caterpillar shares were down about 1.7% in premarket trading. S&P 500 and Dow Jones Industrial Average futures fell 0.7% and 0.5%, respectively.

There doesn’t seem to be a lot to complain about and management feels good about results.

“Our team delivered another good quarter with double-digit top line and adjusted profit per share growth despite ongoing supply chain challenges,” said CEO Jim Umpleby in the company’s news release. “Our second-quarter results reflect healthy demand across most of our end markets.”

Strong demand is a good sign. Unit volume was up as well as machinery pricing. And pricing more than offset rising costs.

Backlog grew as well. Baird analyst Mig Dobre pointed out in a recent research report that U.S. orders for construction machinery have fallen short of shipments over the past three months, resulting in falling backlogs, or order books. That made backlog a watch item for investors.

The company’s book of orders increased in the first quarter of 2022. They increased another $2 billion through the end of June.

Options markets imply shares will move about 4%, up or down, following earnings. Shares have moved about 3%, up or down, on average following the past four quarterly reports, with one gain and three losses even though the company has earned more than expected each time.

As of the close of trading on Monday, Caterpillar shares have declined about 6% so far this year, better than the 14% and 10% respective declines of the S&P 500 and Dow Jones Industrial Average.

Caterpillar management scheduled a conference call at 8:30 a.m. Eastern time to discuss the results.

Write to Al Root at allen.root@dowjones.com

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