To say the stock market is skittish is an understatement. It’s as jumpy as a cat on a hot tin roof. That was apparent when Caterpillar (CAT) raised its 2018 adjusted EPS guidance by $2.00 to a range of $10.25 to $11.25, yet its stock dropped 6.3% on Tuesday.

When CFO Brad Halverson told investors that Q1’s adjusted profit per share would be the “high-water mark for the year,” investors headed for the exits.

Halverson did not say Q1 was the high-water mark for the cycle; he said it was for the year. But an analyst on the call noted that over the last 20 years, the high-water mark has always been Q2, with two exceptions. One exception was in 2015 when the oil and gas industry was rolling over. Ominous indeed. Or maybe not.

CAT’s IR person gave three reasons why the high-water mark would be Q1 this year. First, Q1 benefited from the company’s ability to raise prices more than its costs increased, but for the rest of the year it expects the reverse to be true. Second, spending on R&D projects was slow in Q1 but will pick up as the year progresses. And last, CAT uses absorption costing so it benefitted from the $900 million increase in inventories in Q1. Inventories are expected to decline going forward, so that benefit won’t be repeated.

At the end of the call, with the share price already sliding, CEO Jim Umpleby said, “it certainly wasn’t our intent to express a concern about peak, to use your word…” And the IR person laundry-listed a number of areas of potential growth: In North America, new home construction remains well below potential. Latin America is just starting to recover and is well below sales levels of a few years ago. Likewise, European sales are far below where they were decades ago.

Undoubtedly with Q1 revenue up 31% y/y and adjusted EPS more than double last year’s results, it’s understandable that investors are skittish. How do you top those results? However, analysts do expect CAT to grow EPS in coming years, from $1.26 in 2017 to $9.14 this year and $10.54 in 2019. Those estimates will certainly be revised upward given the company’s new and improved forecast. Estimates have been climbing for the past three months, when this year’s EPS target was only $8.29 and next year’s target was $9.68.

We’d be more concerned about CAT if the company’s end markets appeared to be in trouble. But they don’t. Here’s a quick look some of them:

(1) Miners are digging. CAT’s equipment is sold to miners, and right now the CRB raw industrials index is up 4% y/y and 31% from its low in November 2015 (Fig. 1).

(2) Drillers are drilling. CAT does a lot of business in the energy patch, and business is booming. The price of Brent crude oil hit $73.86 Tuesday, up 10.5% ytd (Fig. 2). US oil field production is at all-time highs, at 10.6 million barrels a day, and the number of US gas and oil rigs has popped over the past year (Fig. 3 and Fig. 4).

(3) Builders are building. US new home sales continue to rise but remain well below levels that indicated a robust market in years past. New home sales rose 4.0% in March m/m to a seasonally adjusted rate of 694,000, following a 3.6% increase in February. Sales rose 8.8% y/y during the 12 months ended in March (Fig. 5). So far, higher mortgage rates haven’t slowed down the pace of sales, but it’s certainly an area to watch (Fig. 6).

CAT was just one of the many Industrials companies reporting earnings this week. Results were a mixed bag, with some names, like Boeing and Norfolk Southern, beating estimates and trading up after reporting earnings. Another group, including United Technologies and General Dynamics, beat estimates and shares sold off anyway. Those that failed to meet analysts’ expectations were taken to the woodshed, including Crane, which missed revenue expectations.

There’s a lot of positive news priced into the S&P 500 Industrials stock price index, which has climbed 8.4% over the past year (Fig. 7). Revenue and earnings growth rates for the sector are expected to be robust. Analysts’ consensus forecasts call for a 6.5% jump in revenues this year and 4.9% next year (Fig. 8). An 18.5% improvement in earnings is expected this year, followed by a 12.6% gain next year (Fig. 9). The sector’s earnings have enjoyed strong upward revisions in recent months (Fig. 10). And while the sector’s forward P/E did look a little peakish earlier this year at 19.5, it has subsequently dropped back to 17.1, leaving it high relative to history but not overly so (Fig. 11).

Dr. Ed Yardeni is the President of Yardeni Research, Inc., a provider of independent global investment strategy research.