Caterpillar Stock Is Trading Lower Despite Q2 Earnings Beat, Strong Q3 Volume Growth Outlook

Caterpillar Inc. CAT reported second-quarter sales growth of 29% year-over-year to $12.89 billion, beating the consensus of $12.58 billion.
Segment Revenue: Construction Industries $5.66 billion (+40% Y/Y), Resource Industries $2.58 billion (+41% Y/Y), Energy & Transportation $4.97 billion (+20% Y/Y), others $18 million (+11% Y/Y), and Financial Products $774 million (+1% Y/Y).
The revenue increase was due to higher sales volume driven by higher end-user demand for equipment and services and changes in dealer inventories.
Adjusted EPS improved to $2.60 from $1.27 in 2Q20, beating the consensus of $2.38.
The operating profit increased by 128.2% Y/Y to $1.79 billion, and the margin expanded by 605 bps to 13.9%.
The order backlog increased by $5.5 billion in the quarter.
Caterpillar generated a YTD operating cash flow of $4.05 billion, compared to $2.52 billion a year ago. It ended the quarter with $10.8 billion of cash and short-term investments and restricted cash.
Outlook: Caterpillar expects 3Q 2021 adjusted operating profit margin to be higher than 3Q 2020 on increased volume; margins to moderate vs. 2Q 2021.
It told Reuters that the full-year price increases are expected to offset rising costs. The company also expects demand from China to be strong throughout 2021.
Price action: CAT shares traded lower by 2.15% at $208.00 in the premarket session on the last check Friday.
Photo by Steve Adcock from Pixabay

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