Three of our Club holdings — Caterpillar (CAT), Honeywell (HON) and Linde ( LIN) — are engaged in providing products and services that drive the industrial economy. They all reported strong first-quarter results Thursday. Here’s a rundown of the numbers and our analysis. Caterpillar shares turn around CAT YTD mountain Caterpillar YTD Dow component Caterpillar delivered a blowout first quarter. However, concerns about whether those results were as good as it will get for the machinery maker sent shares sharply lower early in Thursday’s session. We don’t agree with that view, and we would have been buyers of the weakness if we were not restricted from trading. Late in the day, CAT erased most of its losses as the broader market took off. Caterpillar revenue in Q1 increased 16.7% year over year to $15.86 billion, exceeding estimates of $15.26 billion, according to Refinitiv. Adjusted earnings per share (EPS) surged more than 70% to $4.91, crushing estimates of $3.78. Better-than-expected operating margin of 17% was so strong, due mostly to manufacturing costs that were not as high as expected as well as higher prices. Bottom Line on CAT This was a very strong quarter from Caterpillar as business continues to benefit from pricing power that outweighs costs. That, in turn, led to stronger margins and higher profits. Management sounded upbeat on the call about its demand trends and did not indicate a material slowdown, which the stock price had earlier suggested, was imminent. How could they when so much money tied to infrastructure spending is about to flow through to its backlog? A lot was being made Thursday about Q1 representing Caterpillar’s peak and the business will only get worse from here. However, we remain steadfast in our view that the billions of dollars earmarked by the government for infrastructure projects will prolong the cycle. Here are the Q1 numbers All three of Caterpillar’s physical product segments, as indicated in the table above, reported…
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