In the current earnings season, several sectors are turning out better than many people expected. That's clearly the case with Caterpillar (NYSE: CAT), the world's biggest construction equipment manufacturer.

For the quarter, the company moved to a profit of $233 million, or $0.36 a share, compared to a loss of $112 million, or $0.19 per share for the first quarter of 2009. But despite its return to profitability, Caterpillar nevertheless saw its revenue decline 11% to $8.24 billion, from $9.23 billion a year earlier.

In the company's machinery unit, sales fell just 1% year over year. Nevertheless, both higher price realizations and favorable currency trends helped to stem the decline, creating the company's smallest volume dip since the Great Recession reared its ugly head. From a geographic perspective, volumes were down in three of the company's four regions, leaving Asia/Pacific as the sole gainer. China's record-high deliveries accounted for most that region's increase.

Fortunately, the company's future looks considerably brighter. While disclosing its recent results, Caterpillar management revealed that it expects 2010 earnings between $2.50 and $3.25 per share, versus a January outlook of about $2.50 per share.

Many other large equipment makers seem to share Caterpillar's new optimism. As my capable colleague Christopher Barker told you recently, mining equipment makers Bucyrus (Nasdaq: BUCY) and Joy Global (Nasdaq: JOYG) expect hotter times this year. So does Caterpillar's Midwest cousin, Deere (NYSE: DE).  

At the same time, as CEO Jim Owens has noted, "Economic conditions are definitely improving, particularly in the world's developing economies. Industry activity and orders are significantly higher than last year, and are at record levels in some areas."

Given this new strengthening, it appears that Caterpillar is well on its way to becoming a butterfly again. Before that happens, I'd suggest that Fools carefully stash a few of its shares away in their portfolios.

Fool contributor David Lee Smith doesn't own shares in any of the companies named above. He welcomes your questions or comments. The Motley Fool has a giant disclosure policy.