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Caterpillar Earnings Report Lifts Construction Stocks

Shares of Caterpillar CAT soared to a new all-time high on Tuesday after the company reported better than expected third-quarter results and upbeat fourth-quarter guidance, pulling much of the construction and equipment industry—including Thor Industries THO and United Rentals URI—up as well.

Caterpillar topped the Zacks Consensus Estimate for both earnings and revenues. The company’s revenues jumped 25% from the year-ago period to $11.41 billion, while earnings crushed expectations and skyrocketed year-over-year (also read: Caterpillar's (CAT) Cost Discipline Drives Q3 Earnings Beat).

On top of that, the Peoria, Illinois-based company upped its full-year guidance. Caterpillar now expects to post revenues of $44 billion, up from a previous range of between $42 and $44 billion. This comes as welcome news to shareholders and potential investors, as the manufacturing powerhouse reported revenues of $38.54 billion last year, which marked its fourth consecutive year of declining sales.

Caterpillar grew revenues and bolstered its bottom line in its third-quarter thanks to sales growth from all three of its business sectors, as well as a commitment to cutting costs. The company’s three main businesses—Construction Industries, Resource Industries and Energy and Transportation— all experienced revenue growth in every global region Caterpillar operates in.

The company cited gains in its construction-related businesses in China, along with onshore oil and gas in North American, as well as an overall jump in capital investments from mining companies, as some of the biggest reasons for the jump in revenue.

“Higher sales volume and our team’s focus on cost discipline resulted in improved profit margins across our three primary segments,” Caterpillar CEO Jim Umpleby said in a statement.

In terms of earnings guidance, Caterpillar raised its projection from around $5 per share to $6.25 per share. What’s more, the manufacturing equipment power announced it would also raise prices early next year.

Caterpillar’s shares popped over 7% in early morning trading to touch a new all-time intraday trading high of $140.44 per share. Since then, the stock has cooled off a bit and now hovers around 4.5% above Monday’s closing price.

Shares of other construction, mining machinery, and manufacturing companies gained on the back of Caterpillar’s big quarterly beats and upbeat in full-year guidance.

Other Stocks

Caterpillar’s rise helped renew investors’ confidence, which led some infrastructure ETFs to pop. Shares of the PowerShares Dynamic Building & Const ETF PKB and the iShares U.S. Home Construction ETF ITB both jumped nearly 1.0%, while the SPDR S&P Homebuilders ETF XHB experienced marginal gains.

Other infrastructure, mining, and manufacturing companies also experienced gains on Tuesday. Shares of Thor Industries climbed over 1.30%, while United Rentals stock popped by over 2.20%. Gibraltar Industries ROCK, Cummins Inc. CMI, and Deere & Company (DE) stock all gained as well.

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