Earthmoving equipment manufacturer Caterpillar Inc (NYSE: CAT) reported mixed fiscal 2021 third-quarter results. While the earnings surpassed estimates, revenues missed the Street consensus. Two of the business segments – Construction and Resource – performed exceptionally well, paving the way for the earnings beat. The stock ended Thursday’s trading at $204.09, an increase of $7.96 or 4.06% from the prior close.
The Deerfield, Illinois-based company reported third-quarter revenues of $12.397 billion, an increase of 25.50% from $9.881 billion in the similar period last year. Specifically, sales of Machinery, Energy & Transportation products generated $11.707 billion, while financial products contributed revenues of $690 million.
The surge in revenue was led by higher sales volume, beneficial price realization, and the effect of changes in dealer inventories. In particular, dealers’ inventories fell by $300 million in Q3 2021.
For the quarter ended September 30th, 2021, the heavy equipment manufacturer posted a net income of $1.426 billion, or $2.60 per share, compared with $668 million, or $1.22 a share in the quarter ended September 30th, 2020.
Excluding restructuring costs and other expenses, the Q3 2021 adjusted earnings were $1.455 billion, or $2.66 per share, an increase from $832 million, or $1.52 a share in Q3 2020.
Analysts surveyed by Refinitiv had anticipated Caterpillar to report earnings of $2.20 per share on revenues of $12.48 billion.
Commenting on the quarterly result, Chairman and CEO Jim Umpleby said “Our third-quarter results reflect higher sales and revenues across our three primary segments and in all regions.”
Segment-wise,
- The construction industry’s revenues rose by 30% y-o-y to $5.255 billion. The increase was led by higher sales volume and beneficial price realization.
- Resource industries revenues were $2.406 billion, an increase of 32% on a y-o-y basis. Higher end-user demand for equipment and parts led to an increase in revenues.
- Energy & Transportation revenues were $5.077 billion, up 22% from last year. Barring the power sub-sector, all other sub-sectors (oil & gas, industrial, and transportation) recorded growth.
- Other segment revenues grew by 12% to $119 million.
- Financial products revenues were $762 million in Q3 2021, reflecting a rise of 5% from the prior-year period.
The provision for income taxes was based on an estimated annual rate of 25% for Q3 2021, compared with 31% last year. During the third quarter, Caterpillar recorded a benefit of $39 million due to an amendment in the second-quarter tax rate of 26%.
The mixed quarterly results are expected to keep the stock of Caterpillar range-bound in the short term.
Technically, the stock has started rising after consolidating near 200. The stock has also closed above its 50-day moving average. Furthermore, the stochastics oscillator is out of the bearish zone. Therefore, we are anticipating the stock to rally in the days ahead.
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