Caterpillar Reports Better-Than-Expected Third-Quarter Results, Thanks to Strong Pricing

Caterpillar’s stronger-than-expected results led us to increase our fair value estimate to $196 per share from $193. The company increased equipment sales 22% year on year to $14.2 billion. The key drivers were strong pricing and solid volume gains. Caterpillar has flexed pricing to mitigate supply chain constraints. Headwinds included material and freight costs, as well as manufacturing inefficiencies. We expect supply chain challenges to remain persistent throughout 2022 and likely into early 2023.