Caterpillar Stock Increases in Pre-market Trading Following Better-Than-Expected EPS

October 27, 2022 at 09:32 AM EDT

Caterpillar stock was trading at $204.58 pre-Market: 8:49 AM EDT

The stock of Caterpillar (NYSE:CAT) increased by 4.9% in premarket trade on Thursday.

The company reported a third-quarter profit thanks to more robust sales and higher pricing for its construction and heavy equipment.

In addition, a 21% increase in revenue to $15 billion exceeded the forecast by $620 million. Its adjusted earnings of $3.95 per share for the third quarter beat Wall Street estimates by $0.79. The US dollar’s increase in value relative to Australian, Japanese, and European currencies partially negated the income gains.

During Thursday’s premarket trade, Caterpillar’s stock barely changed. Compared to a 20% reduction for the S&P 500 index, it has dropped 4.9% this year (SP500).

“I’d like to applaud our worldwide Caterpillar team for producing another quarter of double-digit top-line growth and record adjusted profit per share,” said Jim Umpleby, chairman and CEO of Caterpillar. Although the third quarter saw good demand in most of our end markets, our team is still committed to supporting our customers.

Earnings behind Caterpillar stock performance

Revenue increased by $1.6 billion due to higher pricing, while $1.4 billion was added to revenue due to increased sales volume. The operating profit margin increased to 16.2% in Q3 from 13.4% in Q3 of the previous year. As a result of favorable product pricing, its operating profit increased by 46% from a year earlier to $2.43 billion. However, growing material costs and R&D costs somewhat offset this increase.

In Q3, the organization repurchased $1.4 billion worth of Caterpillar common stock and distributed $0.6 billion in dividends. In order to address a long-running disagreement about the tax years 2007 through 2016, Caterpillar and the US Internal Revenue Service came to a deal during the quarter without imposing any penalties. The corporation mostly paid the $490 million final tax that the IRS assessed in the settlement for the 10-year period during the third quarter. By the end of the year, the corporation plans to pay the $250 million anticipated interest associated with it.

In A Falling Market, Can CAT Stock Claw Higher?

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