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Caterpillar Beats Earnings Estimates as Supply-Chain Issues Can’t Derail It. But the Stock Falls.

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A Caterpillar front loader is displayed on a mound of dirt
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Caterpillar shares were lower even after the company reported better-than-expected fourth-quarter numbers on Friday. It managed to deal with supply-chain issues and inflation admirably, but investors don’t care about 2021 — they want to hear more about 2022.

Caterpillar (ticker: CAT) shares fell about 1% in premarket trading. S&P 500 and Dow Jones Industrial Average futures were down about 0.3% and 0.4%, respectively.

Coming into Friday trading, Caterpillar stock is up about 4% over the past three months. The S&P has fallen about 6% over the same span. Caterpillar shares gained about 14% in 2021.

Caterpillar reported $2.69 in adjusted per-share fourth-quarter earnings from $13.8 billion in sales. Wall Street was looking for earnings of $2.27 a share from $12.6 billion in sales. A year ago, Caterpillar reported $2.12 in per-share earnings from $11.2 billion in sales.

This is the seventh consecutive earnings “beat” for Caterpillar. The stock, however, has dropped following five of the past six earnings beats. Shares rose 4.1% following a better-than-expected third-quarter 2021 earnings report.

Operating profit grew about $200 million, or 17%, year over year, driven by higher volume and pricing. Operating profit margins came in at about 11.6% for the fourth quarter of 2021, down from 12.5% reported in the fourth quarter of 2021. Higher manufacturing costs were the biggest factor hurting margins, offsetting some of the pricing and volume gains.

“I’m proud of our global team’s continued resilience in what proved to be a challenging and dynamic operating environment,” said CEO Jim Umpleby in the company’s news release. “Amid ongoing supply-chain constraints, our team continues to execute our strategy for long-term profitable growth while striving to meet customer demand.”

Each division grew sales substantially. Sales of construction equipment came in at $5.7 billion, up 27% from the fourth quarter of 2020. Mining and energy-related sales grew 27% and 19%, respectively.

Caterpillar’s lending unit reported $701 million in sales, up about 5%. Operating profit in that division expanded to $248 million, up from $195 million, partly due to lower provisions for credit losses.

Cat ended 2021 on a high note. Now investors shift their attention to 2022.

Management hosts a conference call at 8:30 a.m. Eastern time to discuss results. Caterpillar doesn’t provide detailed forward guidance in recent earnings reports. Analysts and investors will be looking for hints about 2022 demand, pricing and costs on that call.

Write to Al Root at allen.root@dowjones.com

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