Caterpillar on Tuesday blew past Wall Street's profit and revenue estimates on surprisingly strong demand for its construction equipment in North America and robust sales in China, pushing its shares up 7 percent in early trading.
The company also raised its full-year forecasts for sales and earnings, expecting revenue in its construction business to surge about 20 percent and mining business to jump 30 percent.
The construction industry in North America is turning around after years of slow demand, fueled by a steady housing recovery, an improving labor market and higher spending by oil and gas companies.
Sales in North America, Caterpillar's biggest market, jumped 27 percent in the third quarter ended Sept 30. Construction revenue from the region rose 31 percent to $2.17 billion and revenue from resources, including mining, rose 28 percent to $581 million.
Some analysts, however, questioned if the company could sustain such high growth rates.
"Sustainability of the scorching pace of growth Caterpillar set in the latest quarter is in question because construction spending in the country has not yet hit an inflection point," said Jefferies analyst Steve Volkmann.
In the Asia Pacific region, Caterpillar's third-biggest, sales jumped 57 percent to $1.29 billion, boosted by demand from China.
While China has been the bright spot for Caterpillar in the past few quarters, the pace of growth in the country's property sector cooled in the third quarter, potentially hurting demand for the company's iconic yellow earth-moving equipment in the near future.
Caterpillar's shares rose to an all-time high of $140.44, but pared some gains to trade up 5 percent at $138.37. The stock has risen 42 pct this year, compared with an 18 percent increase in the Dow Jones Industrial Average.
Excluding restructuring costs, Caterpillar earned $1.95 per share, compared with the average analyst estimate of $1.27 per shares, according to Thomson Reuters I/B/E/S.
The earnings beat was even more remarkable as analysts had raised their third-quarter estimates by nearly 30 percent in the past three months.
Net profit rose nearly four-fold to $1.06 billion.
Total revenue rose to $11.41 billion, ahead of market estimates of $10.65 billion.
The company said it now expects 2017 sales and revenue of $44 billion, up from its previous forecast of $42 billion to $44 billion. It expects adjusted earnings of $6.25 per share, up from the $5.00.