Caterpillar (NYSE:CAT) reported second-quarter earnings on Tuesday, surpassing analyst profit expectations, while revenue fell slightly short of estimates. The heavy equipment manufacturer's stock rose more than 2% following the announcement.
Caterpillar posted adjusted earnings per share of $5.99 for the second quarter, beating the analyst consensus of $5.54 by $0.45. Revenue came in at $16.7 billion, just below the estimated $16.76 billion and down 4% YoY 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.
The adjusted operating profit margin improved to 22.4% in Q2 2024, up from 21.3% in Q2 2023.
Chairman and CEO Jim Umpleby stated: "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 deployed $2.5 billion for share repurchases and dividends, including $1.8 billion for stock buybacks and $0.6 billion for dividend payments.
Reacting to the report, analysts at Morgan Stanley said they expect a positive stock reaction based on the EPS beat, sequential backlog decrease, and raised 2024 adjusted EPS outlook," with shares to ultimately cue off of management commentary."
They noted that CAT's full year 2024 adjusted operating profit margin outlook was raised to now be "above the top end of the target range relative to the expected corresponding level of sales and revenues" versus a previous guide of "in the top half of the target range" although lower in 2H24 versus 1H24.
Meanwhile, analysts at Stifel said it was a mixed report, with top line modestly below consensus estimates while adj. EPS was 8% ahead.
"Bears will call out the lowered FY guidance, with sales now seen lower yr/yr, despite dealer inventory growth vs. the prior expectation of flat sales and flat dealer inventory," wrote the firm. "Bulls will point to the sequential increase in backlog and healthy margin structure supporting the higher operating profit and EPS outlook."