Analyst Note| Dawit Woldemariam |
Caterpillar posted solid first-quarter results, leading us to increase our fair value estimate to $163 from $158, reflecting a stronger near-term outlook. In the quarter, equipment sales increased nearly 13% year over year to $11.2 billion. Construction industries led most of the revenue growth (up 27% year over year), largely due to improved sales volume. Notably, the Asia-Pacific and Latin America regions reported high-double-digit sales growth, benefiting from higher end-user demand. Sales in North America grew slightly (up 2% year over year), as non-residential construction was weak, but has shown gradual improvements since the pandemic lows in 2020. That said, the region did see some uplift from strong residential construction activity in the U.S.