Caterpillar (NYSE:CAT) shares boomed higher on Tuesday after third quarter results beat market expectations.
At US$11.4bn, the big digger group reported a US$2bn increase in revenue compared to the same three months of the preceding year. The market had been expecting a figure of around US$10.6bn.
Quarterly profit for the period came in at US$1.77 per share, up from 48 cents in 2016 quarter and some way better than the US$1.27 per share anticipated by analysts.
Commentators began to suggest that the group's big bet on massive China - a key market for all resource stocks - was beginning to pay off.
The firm's earnings were boosted by increased growth in construction in China, fuelling the need for machinery.
“Asia Pacific saw strength across the region,” the chief financial officer Bradley Halverson reportedly told analysts on an earnings call.
The company pumped cash into China around seven years ago, at the height of the strong commodities cycle.
But by 2012, Chinese growth had eased and the commodities boom went. Then in mid-2014 of course the price of oil went through the floor, entrenching the issue further.
Caterpillar told investors it now anticipates US$6.25 earnings per share for the full year.
“Higher sales volume and our team's focus on cost discipline resulted in improved profit margins across our three primary segments,” said Jim Umpleby, Caterpillar chief executive.
Looking ahead, the company said it sees strength in a number of industries and regions – specifically it noted the construction business in China and the North American oil and gas sector as areas of growth.
In New York, Caterpillar shares rose 6.4% in premarket deals to trade at US$140.11. Later in the session, they added 4.91% to US$138.15.