In this segment from MarketFoolery, host Chris Hill and Million Dollar Portfolio's Matt Argersinger talk about what's behind construction and heavy equipment giant Caterpillar's (NYSE:CAT) impressive quarterly report. Yes, the fundamentals and broader business are all humming along, but it's also important to recognize what came before. The business has been undergoing expensive multiyear restructurings and dealing with issues in China -- and those aren't entirely in the rearview mirror yet.

A full transcript follows the video.

This video was recorded on April 25, 2017.

Chris Hill: Let's talk about one company that's helping to push the market up today, certainly pushing up the Dow, because Caterpillar is one of the Dow 30 stocks. Caterpillar's first-quarter report was fantastic. This is not a beat-by-a-penny situation. Their profits came in more than double what Wall Street was expecting, their overall revenue was solidly higher, they raised guidance for the full fiscal year. And the stock, this is one of those tried-and-true, steady blue chip performers, their stock is up nearly 7% this morning. I get that this was a great quarter, but I'm assuming this is what you were referring to when you were like, wow, 7%? That seems lofty for a company like Caterpillar.

Matt Argersinger:
 It does. The earnings picture looks great for them. But that's because Caterpillar, like a lot of companies, has been doing a lot of restructuring lately. If you look at Caterpillar, for example, they've had restructuring charges every quarter going back to the end of 2012. Just last year, they had about $700 million of restructuring costs. This is just them shuttering old facilities, moving a plant somewhere else, or shifting capital from one segment to another, and shutting down operations.

Hill:
 And that whole problem they had in China.

Argersinger:
 That that whole problem they had in China. The problem with me, though, is that when I see a company that restructures this often, I don't believe management when management comes out and says, "These are one-time expenses that were taking out of our earnings. Here's our real earnings." That makes me very uncomfortable. With a company like Caterpillar that's doing that, I tend to count those charges. And if you do, the earnings per share don't look nearly as good. Then, if you just look at revenue growth overall, it's up 4%. I know they saw some strength in the resource business and the energy transportation business. Those segments have really struggled over the past few years with commodity prices and oil prices. But, the fact that those are bouncing back is a good part of the story. I would just say, be very careful of Caterpillar. We talked about lofty valuations. You have a company growing revenue 4%, gave great guidance for this coming year, but is this a company that should trade at 32 times earnings? Those earnings, by the way, are the adjusted earnings. They're already restructuring more this year, and they're taking those out of their guidance.

Hill:
 I didn't realize the multiple was that high.

Argersinger:
 32 times! That, to me, I think Caterpillar is a great company. It's an industry bellwether, it's very diversified, but I'm not paying that multiple for a company like this.

Hill:
 And you hit on a key word there, which I think is part of a small sliver of the enthusiasm that we're seeing today, and that's bellwether. I think any time -- Caterpillar is on that short list of large companies that, when they do well, it's like a Rorschach test, but a Rorschach test where every institutional investor sees something positive. When Caterpillar puts up a really good quarter, I think you have a lot of people on Wall Street saying, "Oh, this means great things for housing, this means great things for infrastructure."

Argersinger:
 "Energy is great, mining is coming back," yeah, all those things, you're right.

Chris Hill has no position in any stocks mentioned. Matthew Argersinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.