Caterpillar Jumps 4% on Q3 Outperformance


Shares of Caterpillar, Inc. (CAT), the world’s largest equipment manufacturer and American Fortune 100 company, jumped 4.1% after reporting outstanding third-quarter results. The solid results were attributed to continued momentum in all three major business segments across all geographies. Shares of the dividend aristocrat closed at $204.09 on October 28.

CAT posted adjusted earnings of $2.66 per share, up 75% year-over-year and much higher than analyst estimates of $2.20 per share.

Further, quarterly sales and revenue came in at $12.4 billion, growing 25% compared to the prior-year quarter and slightly lower than the consensus estimate of $12.48 billion. Robust sales growth was driven by higher volumes, rising demand for equipment and services, and favorable pricing.

Compared to Q3FY20, CAT’s Construction Industries segment revenue grew 30%, Resource Industries revenue increased 32%, and Energy & Transportation revenue climbed 22%.

Additionally, CAT rewarded shareholders with $2 billion in dividends and share buybacks during the quarter. (See Insiders’ Hot Stocks on TipRanks)

Commenting on the results, Caterpillar Chairman and CEO Jim Umpleby said, “Our global team continues to execute our long-term strategy for profitable growth while working to mitigate supply chain challenges as we serve our customers.”

Impressed with CAT’s solid quarterly performance, Robert W. Baird analyst Mircea Dobre reiterated a Buy rating on the stock with a price target of $270, implying 32.3% upside potential.

Dobre noted that CAT managed the ongoing supply-chain challenges and inflationary pressures appropriately and reported better-than-feared results. The analyst sees multiple catalysts going forward, namely increased U.S. infrastructure spending, CAT’s growth decoupling from China, becoming more carbon-efficient, and running a strong dealer network with a focus on end-user demand and accelerating pricing.

The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 8 Buys, 4 Holds, and 1 Sell. The average Caterpillar price target of $237.62 implies 16.4% upside potential to current levels. Shares have gained 31.9% over the past year.

Moreover, TipRanks data shows that financial blogger opinions are 85% Bullish on CAT, compared to a sector average of 68%.

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