U.S. Markets open in 5 hrs 45 mins

Two iconic American brands just crushed expectations

Myles Udland
Markets Reporter

McDonald’s (MCD) and Caterpillar (CAT), two iconic American brands, crushed earnings expectations in the first quarter of 2017.

In early trading on Tuesday, shares of McDonald’s were up as much as 2.5% while Caterpillar shares were higher by as much as 6.5%.

Caterpillar, which is often cited as a bellwether of global manufacturing activity, reported first quarter adjusted earnings of $1.28 on revenue of $9.8 billion, topping expectations for earnings of $0.62 per share on revenue of $9.27 billion.

The company also raised its revenue guidance for 2017 and said it “is seeing signs of recovery in several of the industries it serves,” though Caterpillar noted that, “geopolitical and market uncertainty along with volatility in commodity prices continue to present risks for the rest of the year.”

Caterpillar now expected 2017 sales to be between $38-$41 billion better than its prior view for sales of $36-$39 billion.

“Our team delivered outstanding operational performance and, for the first time in more than two years, same quarter sales and revenues increased,” Caterpillar CEO Jim Umpleby said in a statement.

Caterpillar’s sales finally turned positive in March after almost five years of declines. (Source: Bespoke Investment Group)

This report comes a day after Caterpillar’s 3-month rolling sales as of March turned positive for the first time since November 2012, bolstered by a 46% increase in Asia. In a note on Monday, analysts at Bespoke Investment Group said Caterpillar’s sales illustrate that “global growth trends that are improving at a better rate than the US.”

Retaining, regaining, and converting customers

McDonald’s, which has seen seen sales bounce over the last year or so, reported first quarter comparable U.S. sales that jumped 1.7%, topping expectations for a decline of 0.8%. Global comparable sales — which track sales at locations open 13 months or more — rose 4% during the first quarter, better than the 1.3% increase that was expected.

The fast-food chain also reported earnings per share of $1.47 on revenue of $5.68 billion, beating Wall Street expectations for earnings of $1.34 on revenue of $5.53 billion.

In a statement, CEO Steve Easterbrook said, “There’s a sense of urgency across the business as we take actions to retain existing customers, regain lapsed customers and convert casual customers to committed customers.”

As CNBC’s Dominic Chu noted on Twitter, Caterpillar’s current jump looks set to add about 40 points to the Dow, while McDonald’s pre-market gain should add almost 25 points to the index.

After a huge rally on Monday after the results of the first round of France’s presidential election, U.S. stocks were rallying again on Monday with the Dow up more than 150 points and tech-heavy Nasdaq trading above 6,000 for the first time.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

Read more from Myles here: