By Aishwarya Nair and Bianca Flowers
(Reuters) - Heavy-machinery maker Caterpillar Inc (NYSE:CAT). is expected to report a double-digit growth in profit and revenue when it releases quarterly earnings on Thursday, as demand for the company's equipment and parts remains robust.
Still, investors will be looking for signs of softening demand as expectations of a global recession increase and after a sales miss in the previous quarter.
The world's largest manufacturer of construction and mining equipment has weathered inflationary pressures, supply chain constraints and escalating freight and production costs by increasing prices over the last two years. Its equipment orders have remained strong, even with limited availability.
GRAPHIC: Caterpillar's revenue performance over past four quarters (https://graphics.reuters.com/CATERPILLAR-RESULTS/lgvdkmkkxpo/chart.png)
"The combination of low inventory and high backlog provide a positive backdrop for the company's near future," Third Bridge analyst Peter McNally said.
Caterpillar is expected to post third-quarter earnings of $3.16 per share on $1.67 billion of net income, compared with $1.45 billion a year ago. Revenue is forecast to climb to $14.33 billion, up 15.63% from a year ago, according to Refinitiv analysts.
While China's property crisis has resulted in slumping demand for excavators and the residential market in the United States faces a downturn, businesses are continuing to finance and invest in equipment.
"We're seeing signs of weakness in the consumer end of the economy, but for things like commercial construction, mining and oil and gas, we're really seeing no signs of weakness in those markets yet," said Stephen Volkmann, Jefferies senior machinery analyst.
The resurgence of drilling activity prompted mining customers to invest in their fleet in the first half of the year.
However, McNally said falling commodity prices could impact the industrial bellwether going forward as economic data suggest weakening demand for oil.
"The question will be how that is likely to impact the order outlook for key end markets like mining and energy," McNally said.