Caterpillar entered the second quarter of 2025 with a mixed performance picture. Commercially, it was a stable period with a slight decline in sales, but operationally the company was hit by higher production costs and tariff pressures, which translated into lower margins and earnings per share. However, in the context of a cyclical industry, the resilience of demand is notable, particularly in the Energy & Transportation segment, where orders are growing due to infrastructure and energy projects. At the same time, management continues to be disciplined in its capital allocation and is increasing the proportion of cash returned to shareholders.

Structurally, Caterpillar $CATis confirmed to be on a stronger footing than in previous cycles. Higher service and financing ratios dampen volatility, manufacturing process upgrades increase productivity, and a declining share count supports earnings per share growth over the long term. While short-term headwinds in pricing and production costs…