Caterpillar Earnings: Improved Margin Guidance Offsets Volume Headwinds; Shares Expensive

Wide-moat-rated Caterpillar reported mixed second-quarter results as revenue declines were offset by margin gains in the quarter. Consolidated revenue fell 4% year over year to $16.7 billion, as favorable pricing partially offset lower volume. Adjusted operating margin rose 110 basis points to 22.4% because of a combination of higher pricing and lower manufacturing costs. As a result, management updated full-year guidance to account for lower revenue estimates and for margins to exceed the original target range provided at the beginning of the year.