Earth-moving equipment producer Caterpillar Inc (NYSE: CAT) published better-than-anticipated fiscal 2022 second-quarter earnings. However, revenues missed Wall Street estimates. The market responded negatively to the quarterly results on concerns over falling sales at dealers. The stock of Caterpillar closed Tuesday’s trading session at $183.51, down 5.82% or $11.35 from its prior close.
The Peoria, Illinois-headquartered construction machinery manufacturer recorded 2Q 2022 revenues of $14.25 billion, up 10.60% from $12.89 billion in 2Q 2021. Analysts surveyed by Bloomberg had anticipated the company would report revenues of $14.35 billion for the latest quarter.
For the second quarter, which ended June 30, 2022, Caterpillar posted a net profit of $1.67 billion, or $3.13 per share, an increase from $1.41 billion, or $2.56 per share, in the quarter ended June 30, 2021.
Excluding restructuring costs, Caterpillar recorded a 2Q22 adjusted profit of $1.699 billion, or $3.18 per share, compared with $1.435 billion, or $2.60 per share, in 2Q 2021.
Experts surveyed by Bloomberg had anticipated the mining machinery manufacturer to record earnings of $3.01 per share in the latest quarter. In the first quarter, the company reported a net profit of $2.87 per share on incomes of $12.90 billion.
Commenting on the second-quarter results, Caterpillar’s CEO, Jim Umpleby, said, “Our team delivered another good quarter with double-digit top line and adjusted profit per share growth despite ongoing supply chain challenges.”
Segment wise,
- Construction Industries’ revenues rose by 7% y-o-y to $6.033 billion. The increase is mainly due to higher prices, partly negated by negative currency exchange impacts associated with the euro, the yen, and the Aussie.
- Resource Industries’ incomes were $2.961 billion, up 16% from last year. The growth was led by an increase in prices and also higher sales volume (driven by aftermarket parts).
- Energy and Transportation revenues surged 15% y-o-y to $5.705 billion. Sales rose across all applications (oil and gas, power generation, industrial, and transportation).
- Financial products incomes were $708 million, an increase of 2% from the prior-year period. The consensus estimate was $733 million.
The operating margin inched lower to 13.60% in 2Q 2022, from 13.90% in 2Q 2021. Based on the provision for income taxes, Caterpillar’s annual tax rate was roughly 24% in 2Q 2022, compared with 26% in 2Q 2021.
During the second quarter, Caterpillar spent $1.10 on share repurchases. Additionally, the company paid dividends of $0.60 billion. At the end of the second quarter, the company had $6 billion in cash.
The mixed quarterly results are projected to keep the stock range bound in the short term.
Technically, the stock has found support at 170 levels. The next resistance is expected at around 210. The stochastics indicator has started rising towards the bullish zone. We are expecting the stock to begin its uptrend in the coming day.
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