Caterpillar (NYSE:) reported second-quarter earnings on Tuesday, which beat analysts’ expectations while revenue fell slightly short of estimates. Shares of the heavy equipment maker rose more than 2% following the announcement.
Caterpillar posted adjusted earnings per share of $5.99 for the second quarter, beating analysts’ consensus of $5.54 by $0.45. Revenue was $16.7 billion, just below the $16.76 billion estimate and down 4% year over year from $17.3 billion in the same quarter last year. The company attributed the revenue decline primarily to lower sales volume, partially offset by favorable price realization.
Adjusted operating profit margin improved to 22.4% in the second quarter of 2024, compared to 21.3% in the second quarter of 2023.
President and CEO Jim Umpleby said, “Our results continue to reflect the benefit of the diversity of our end markets as well as the disciplined execution of our strategy for long-term profitable growth.”
During the quarter, Caterpillar spent $2.5 billion on share repurchases and dividends, including $1.8 billion on share repurchases and $600 million on dividend payments.
In reaction to the report, Morgan Stanley analysts said they expect a positive reaction from the stock based on the EPS beat, the declining sequential backlog and the increased 2024 adjusted EPS outlook, “with the actions ultimately driven by management's commentary.”
They noted that CAT's full-year 2024 adjusted operating profit margin outlook was raised to now be “above the upper end of the target range relative to the corresponding expected level of sales and revenue” compared with a previous guidance of “in the upper half of the target range”, albeit lower in 2H24 compared to 1H24.
Meanwhile, analysts at Stifel said it was a mixed report, with revenue modestly below consensus estimates while adjusted earnings per share were 8% ahead.
“Bears will bemoan the lowered fiscal year guidance as sales are now projected to be lower than the prior year despite dealer inventory growth versus prior expectations of flat dealer sales and inventory,” the firm wrote. “Bulls will point to the sequential increase in order backlog and healthy margin structure supporting the outlook for higher operating profit and earnings per share.”
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