Caterpillar and 3M Show What Peak Earnings Look Like
Growth isn’t falling off a cliff, but we may be at a turning point.
Enjoying the ride?
Photographer: Muhammed Enes Yildirim/Anadolu Agency/Getty Images
This is what a peak in industrial earnings looks like.
Caterpillar Inc. and 3M Co. plunged on Tuesday following the release of their third-quarter results as investors worried the best sales growth and profit margins were behind them. Peak earnings woes have dogged industrial companies as President Donald Trump’s trade war with China exacerbates the cost pressures that are typical later in an economic cycle. To mitigate the extra expenses, companies are raising prices and doing so with success: At 3M, the spread between price increases and raw-material costs was a positive 30 basis points, while Caterpillar gave partial credit to higher prices for its third-quarter operating-profit improvement.