Caterpillar Inc. (NYSE:CAT) shares rose on Wednesday after the company announced its third-quarter 2025 results, which topped Wall Street expectations, driven by strong demand across key business segments.

Sales and revenues climbed 10% year over year to $17.64 billion, beating analyst estimates of $16.77 billion, compared with $16.1 billion in the same quarter last year.

Adjusted earnings per share came in at $4.95, ahead of the $4.52 estimate, though slightly below $5.17 in the prior-year quarter. GAAP profit per share was $4.88, compared with $5.06 a year ago.

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Operating profit margin declined to 17.3% from 19.5%, while the adjusted operating profit margin was 17.5%, down from 20.0%. The company said the lower margin primarily reflected a higher global annual effective tax rate of 24% and a net discrete tax charge in the quarter.

“Solid performance from our team generated strong results this quarter, driven by resilient demand and focused execution across our three primary segments,” CEO Joe Creed said.

“Our team’s continued discipline in a dynamic environment, coupled with a growing backlog, positions us for sustained momentum and long-term profitable growth.”

Segment Performance

Construction Industries’ revenue rose 7% to $6.76 billion, led by higher sales in North America and EAME, though segment profit fell 7% to $1.38 billion due to unfavorable price realization and higher manufacturing costs from tariffs.

Resource Industries’ revenue increased 2% to $3.11 billion, while profit declined 19% to $499 million, reflecting higher input costs and pricing pressure.

Energy & Transportation was the standout performer, with sales increasing 17% to $8.39 billion and profit rising 17% to $1.68 billion, driven by higher volume and price realization across oil and gas, power generation, industrial, and transportation segments.

The Financial Products segment reported a 4% revenue increase to $1.08 billion, while profit slipped 2% to $241 million due to higher credit loss provisions and SG&A expenses.

Operating cash flow for the quarter totaled $3.7 billion, with cash and short-term investments of $7.5 billion at quarter end. The company returned $1.1 billion to shareholders through $700 million in dividends and $400 million in share repurchases.

Outlook

Looking ahead, the company expects 2025 full-year sales and revenues to be modestly higher than those in 2024, with full-year services revenues approximately flat compared to the prior year.

Full-year incremental tariff costs are expected to be in the range of $1.6 billion to $1.75 billion. Excluding tariffs, adjusted operating profit margin is anticipated to be in the top half of its annual target range; including tariffs, it is expected to land near the bottom of the target range.

Management reaffirmed its commitment to executing its long-term strategy for profitable growth and emphasized tariff headwinds and macroeconomic factors as key considerations for 2025.

Caterpillar stated that unfavorable manufacturing costs during the quarter were largely due to the impact of higher tariffs. The company continues to focus on operational discipline and execution as it navigates a dynamic global environment.

Price Action: CAT shares were trading higher by 6.01% to $556.00 premarket at last check Wednesday.

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