Caterpillar Boosts Full-Year Outlook on Strong Sales, Shaking Off Profit Miss

DEERFIELD, Ill. – Shares of Caterpillar Inc. (NYSE: CAT) climbed in afternoon trading Tuesday after the industrial heavyweight raised its full-year sales forecast, signaling strong underlying demand that overshadowed a miss on second-quarter profit expectations.

Despite facing significant cost pressures from tariffs, the maker of construction and mining equipment reported better-than-expected sales for the quarter ending June 30. The company now anticipates its full-year 2025 sales will be “slightly higher” than in 2024, an upgrade from its previous guidance of roughly flat performance.

The positive outlook helped investors look past a quarterly profit that fell short of analyst predictions. Total sales for the second quarter were $16.57 billion, narrowly beating the FactSet consensus estimate of $16.30 billion. This resilience was a key factor in the stock’s recovery, which was up 0.6% in afternoon trading after falling as much as 4.5% in the premarket session.

A major point of focus during the company’s conference call was the impact of trade tariffs. Chief Executive Joe Creed acknowledged that tariffs would be “a more significant headwind to profitability” in the second half of the year. Caterpillar projects net incremental tariff costs of approximately $1.3 billion to $1.5 billion for the full year 2025, with an estimated impact of $400 million to $500 million in the third quarter alone.

“While we have taken initial mitigating actions to reduce the impact, tariff and trade negotiations continue to be fluid,” Creed stated, adding that the company intends to implement longer-term solutions once there is more certainty.

For the second quarter, Caterpillar reported an adjusted earnings per share of $4.72, below the FactSet consensus of $4.89. Net income fell 18.7% from the prior year to $2.18 billion.

However, a breakdown of the company’s performance revealed areas of strength:

• Energy & Transportation: Sales in this segment grew a robust 7% to $7.84 billion.

• Resource Industries: Revenue fell 4% to $3.09 billion but still surpassed analyst expectations.

• Construction Industries: Sales were down 7% to $6.19 billion.

A strong indicator of future business was the company’s backlog, which grew by $2.5 billion during the quarter, with increases across all three primary segments.

Analysts noted that while near-term challenges exist, Caterpillar’s long-term position is solid. “Caterpillar remains well positioned to benefit from the shift in construction spending toward infrastructure projects supported by a pickup in government investments,” wrote Edward Jones analyst Faisal Hersi in a note.

So far in 2025, Caterpillar’s stock has demonstrated significant strength, gaining 20.3% and handily outperforming the S&P 500 index’s 7.5% rise.