Caterpillar Earnings: Strong Demand Lifts Second-Quarter Performance

Solid demand and improving dealer inventories led Caterpillar to post strong second-quarter earnings. The company's stock was up nearly 9% in intraday trading, as Caterpillar outperformed consensus sales and earnings per share estimates for the quarter. The strong quarter pushed us to raise our fair value by 7% to $223. Our fair value raise was mostly attributable to our stronger near-term expectations for both sales and operating margins. We expect Caterpillar's top line to grow by 15% in 2023, while operating margins expand by nearly 250 basis points.