Caterpillar tanks in broader selloff and after executives say first-quarter earnings represent 'high watermark' for the year (CAT)

The maker of large industrial equipment raised its forecast for earnings this year, as it expects demand from its clients to increase.
Its stock opened higher for trading, but gave up gains after executives said on the earnings call that the first-quarter profit per share was a "high watermark" for the year.
Caterpillar's outlook on the global economy is often used as a temperature check because its equipment is used for massive capital projects.

Caterpillar shares fell by as much as 6% Tuesday, the second-biggest drop on the Dow Jones industrial average, after the company said its first-quarter results represented a "high watermark" for the year.

The maker of giant industrial equipment reported earnings that were better than Wall Street had expected, and raised its outlook for the year.

"The outlook assumes that first quarter adjusted profit per share will be the high watermark for the year," said Bradley Halverson, the chief financial officer, during the earnings call.

Caterpillar's shares were also dragged lower in a broader stock market selloff after the closely watched 10-year yield topped 3% for the first time since 2014.

Caterpillar earned $2.82 per adjusted share, topping the forecast for $2.12 according to Bloomberg. Revenue rose 31% year-on-year to $12.9 billion, beating the estimate for $12.04 billion.

Caterpillar raised its full-year guidance because it expects continued economic growth and higher demand for its products. It now expects full-year earnings-per-share to be between $10.25-$11.25 per share, better than analysts' median forecast for $9.27.

"The combination of strength in many of our end markets and our team’s continued focus on operational excellence— including strong cost control — helped us deliver improved margins and a record first-quarter profit," Caterpillar CEO Jim Umpleby said in the earnings statement.

Caterpillar's commentary on the global economy is often used as a bellweather because its machinery like excavators and bulldozers are used in massive, expensive capital projects.

The company said it expects the strongest growth in construction to come from North American infrastructure projects and China. The rebound in oil prices should help Latin American economies recover, Caterpillar said.

Caterpillar tanks in broader selloff and after executives say first-quarter earnings represent 'high watermark' for the year (CAT)

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