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Caterpillar Stock Sinks as Lower Sales Offset Profit Beat

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Key Takeaways

  • Caterpillar stock dropped Thursday as weak sales offset an earnings beat in the company’s first-quarter results.
  • The construction equipment and engine manufacturer saw sales decline slightly compared with the first quarter of 2023, which was mostly offset by higher prices.
  • International sales suffered, with sales for some categories falling as much as 25% year-over-year in some regions.

Caterpillar (CAT) shares fell sharply in intraday trading Thursday as lower-than-expected sales offset a stronger profit than analysts estimated.

The construction vehicle and engine manufacturer reported $15.8 billion in total revenue, short of analyst estimates compiled by Visible Alpha of $16.16 billion, but posted a profit of $2.86 billion, or $5.75 per share, topping estimates of $2.53 billion, or $5.02 per share.

Revenue across Caterpillar’s equipment divisions was down $139 million compared with the first quarter of 2023. The company’s sales especially suffered internationally, with construction equipment sales falling in Europe, Africa, and the Middle East (EAME) by 25% year-over-year, and 14% in the Asia/Pacific region.

The energy and transportation division was a bright spot, with revenue increasing 7% from last year thanks to higher demand.

For the current quarter, Caterpillar projects sales to decrease year-over-year, but adjusted operating margins should stay relatively the same thanks to higher prices. For the full fiscal year, the company said sales will likely be similar to the levels it saw in 2023, with no significant changes in machine dealer inventory.

Shares sank 7.4% to $336.53 as of about 10:45 a.m. ET Thursday.

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