Brooke Sutherland is a Bloomberg Gadfly columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.

OK, Caterpillar cheerleaders, you win.

The maker of bulldozers and other machinery reported third-quarter results on Tuesday that were more than 50 percent higher than what analysts were expecting. The showing allowed Caterpillar Inc. to raise its full-year guidance for a third time and kept it on track to increase revenue for the first time since 2012 . And just as happened time and time again this year, Caterpillar's stock responded by galloping past the $82 billion company's previous high and analysts' estimates of a reasonable valuation.

Nothing Matters
However high analysts set the bar, Caterpillar keeps jumping over it. The shares rose as much as 6.7 percent on Tuesday.
Source: Bloomberg

I will point out the usual caveats: First, there already is a hefty amount of optimism baked into Caterpillar's stock price.  The company is in the early stages of repairing the damage done to its earnings by slumping commodity prices. Jefferies analyst Stephen Volkmann says shareholders would have to believe Caterpillar is going to generate well over $10 in EPS when it gets to the middle innings of this recovery process to justify additional gains in the stock. That would be an achievement seeing as Caterpillar's earnings, even at their most recent peak in 2012, failed to breach $9 a share.

(Sur)Passing Grade
Caterpillar earnings easily bested analysts' estimates
Source: Bloomberg

Cost-cutting efforts have paid off, but eventually Caterpillar will have to start spending again. And while revenue from its troubled resource-industries division perked up in the third quarter, the gain was largely due to repair and maintenance work and a restocking of inventories, as opposed to a meaningful uptick in new equipment purchases. Caterpillar also increased its estimate for restructuring costs this year to $1.3 billion. Read more about these vexing earnings adjustments here.

But despite all of this, Caterpillar just keeps blowing even the highest of analysts' expectations out of the water. I still believe all of this might catch up with the company eventually. But that day is not going to be today, or even this year.  

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Brooke Sutherland in New York at

To contact the editor responsible for this story:
Beth Williams at