Caterpillar Stock Gains. What’s Offsetting Its Earnings Miss.

Caterpillar said infrastructure spending continued to drive demand for its machinery. (Dreamstime)

Caterpillar was edging up early on Tuesday after its second-quarter earnings missed expectations but it struck a positive tone on its sales outlook for the rest of the year.

The heavy-duty equipment maker reported adjusted earnings per share of $4.72 a share on revenue of $16.6 billion. Analysts were expecting adjusted EPS of $4.89 on revenue of $16.3 billion, according to a FactSet poll.

Caterpillar said a 1% fall in sales from the same period a year ago was driven by prices, partially offset by higher sales volumes. Caterpillar raised its revenue outlook slightly, saying it expects slightly higher sales for 2025, having previously guided for flat sales.

“We continued to see strong orders across our segments as demand remains resilient supported by infrastructure spending and growing energy needs,” CEO Joe Creed said in a statement.

Caterpillar shares were up 0.9% in early trading, after a 35% run up in the past three months to Monday’s close.

The stock’s recent gains have been partly due to expectations that Caterpillar’s generators will benefit from the growth in data centers to run artificial intelligence. Caterpillar maintained an upbeat tone on that theme, with its Power Generation sales rising 28% from the prior year, which it attributed due to an increase in large reciprocating engines used for data-center applications.

“Buyside expectations were high, and this result likely falls short. However, Caterpillar’s favorable exposure to the power gen / increasing natural gas production theme is likely to provide an underlying bid for the stock,” wrote Raymond James analyst Tim Thein in a research note.

Thein has a Market Perform rating on Caterpillar stock with no target price.

Caterpillar forecast tariff expenses at $1.3 billion to $1.5 billion for 2025 overall, with $400 million to $500 million of costs during the third quarter.

Write to Adam Clark at adam.clark@barrons.com