Caterpillar Inc. (CAT) has just rolled out its second-quarter 2024 earnings, and the results are a mixed bag of highs and lows. The construction and mining equipment giant reported a revenue of $16.7 billion, marking a 4% drop from last year’s $17.3 billion. Despite this dip, the company’s profit per share held steady, coming in at $5.48, a slight decrease from $5.67 last year, but the adjusted profit per share rose to $5.99, up from $5.55.
Caterpillar’s EPS for the second quarter of 2024 came in at $5.48, down from $5.67 a year ago. This decline reflects the impact of reduced sales volumes and increased costs. However, on an adjusted basis, which excludes one-time items, EPS improved to $5.99, up from $5.55 last year, beating analysts’ consensus estimate of $5.56.
A Closer Look at CAT’s Numbers
The decrease in sales was largely attributed to lower sales volumes, which were somewhat offset by favorable price realizations. Operating profit margin saw a tiny dip to 20.9%, down from 21.1% a year ago. However, the adjusted operating profit margin actually improved to 22.4%, up from 21.3%. This suggests that while top-line revenue took a hit, Caterpillar managed to improve its efficiency and profitability in other ways.
Caterpillar CEO’s Comments
“We’ve delivered another strong quarter,” said Chairman and CEO Jim Umpleby. “Our results reflect the diversity of our end markets and the disciplined execution of our strategy for long-term growth.” Caterpillar deployed $2.5 billion in cash for share repurchases and dividends, demonstrating their commitment to returning value to shareholders.
CAT’s Segment Performance Breakdown
Looking deeper into the performance by segments, Construction Industries saw a notable 7% decrease in sales, primarily due to a decline in dealer inventories. Sales in North America remained relatively stable, but there were significant decreases in EAME and Asia/Pacific regions, reflecting broader market challenges.
On the upside, Energy & Transportation recorded a 2% increase in sales, driven by improved performance in oil and gas, as well as power generation. This segment saw a 20% boost in profit, reaching $1.525 billion, largely due to favorable price realizations.
Resource Industries and Financial Products had mixed results. Resource Industries experienced a 10% drop in sales, largely due to reduced sales volumes and unfavorable currency impacts. Despite this, the segment managed to maintain a profit of $718 million. Financial Products saw a 9% increase in revenues, reaching $1.004 billion, but profits were slightly down due to higher provisions for credit losses and increased SG&A expenses.
According to the TipRanks Sales Breakdown tool, Energy & Transportation accounted for 41.8% of revenues, while Construction Industries followed closely with 41%. Resource Industries contributed 20.3%, and Financial Products made up a small fraction of less than 6%.
Is Caterpillar a Good Buy Now?
Analysts remain cautiously bullish about CAT stock, with a Moderate Buy consensus rating based on three Buys and three Holds. Over the past year, CAT has increased by more than 14%, and the average CAT price target of $368.40 implies an upside potential of 16.3% from current levels. These analyst ratings are likely to change following CAT’s results today.
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