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Still, investors will be looking for signs of softening demand
as expectations of a global recession increase and after a sales
miss in the previous quarter.
The world's largest manufacturer of construction and mining
equipment has weathered inflationary pressures, supply chain
constraints and escalating freight and production costs by
increasing prices over the last two years. Its equipment orders
have remained strong, even with limited availability.
"The combination of low inventory and high backlog provide a
positive backdrop for the company's near future," Third Bridge
analyst Peter McNally said.
Caterpillar is expected to post third-quarter earnings of $3.16
per share on $1.67 billion of net income, compared with $1.45
billion a year ago. Revenue is forecast to climb to $14.33
billion, up 15.63% from a year ago, according to Refinitiv
analysts.
While China's property crisis has resulted in slumping demand
for excavators and the residential market in the United States
faces a downturn, businesses are continuing to finance and
invest in equipment.
"We're seeing signs of weakness in the consumer end of the
economy, but for things like commercial construction, mining and
oil and gas, we're really seeing no signs of weakness in those
markets yet," said Stephen Volkmann, Jefferies senior machinery
analyst.
The resurgence of drilling activity prompted mining customers to
invest in their fleet in the first half of the year.
However, McNally said falling commodity prices could impact the
industrial bellwether going forward as economic data suggest
weakening demand for oil.
"The question will be how that is likely to impact the order
outlook for key end markets like mining and energy," McNally
said.
(Reporting by Aishwarya Nair in Bengaluru and Bianca Flowers in
Chicago; Editing by Josie Kao)
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