Despite strong results, Caterpillar shares fall

A positive outlook on industrial weather led Caterpillar to report higher profits Thursday, but shares fell amid concerns about a weakening global growth climate as the company reported higher profits.

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Profits rose 26 percent to $1.9 billion from $1.5 billion a year earlier on revenues that climbed 17 percent to $15.9 billion, according to the maker of construction, oil and gas and mining equipment.

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In a conference call hosted by Umpleby, Jim Umpleby, Chief Executive, commented that it felt good about the market conditions and that we had a healthy demand level for our products.

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All three Caterpillar industrial divisions saw their revenues rise year over year, with particularly strong growth in North America offsetting much more modest increases in Asia and the Pacific, with both divisions reporting strong growth.

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The shares of Caterpillar fell 2.4 percent in early trading Monday after the company's earnings surpassed analyst expectations, according to media reports.

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Trade Algo reports that tepid investor reaction is a reflection of "lingering fears about the economy," according to its note.

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Caterpillar's "upbeat report should give investors some comfort, as it shows that the company has done everything it can to stop the recession from worsening," noted Trade Algo. Investors, on the other hand, are waiting for more clarity, especially given rising interest rates, cracks in regional banks, and tightened lending conditions.

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As reported by Trade Algo, Caterpillar's dealers are also expected to moderate their demand in the second half of 2022, compared with previous outsized purchases during the second half of 2021.