Caterpillar's shares fall on fears demand may have peaked

April 27 (Reuters) - Heavy machinery maker Caterpillar Inc (CAT.N) topped Wall Street expectations with a 31% rise in profit on Thursday but a flat order backlog left analysts thinking demand may have peaked and the shares tumbled.

Profit in the first quarter was lifted by a boost in U.S. infrastructure spending which kept order books full and the company was able to raise prices to soften the hit from higher costs.

But the shares fell as much as 4.7% in early trading after the company noted an increase in dealer inventories. An unchanged order backlog compared to the previous quarters may be an indicator of a slowdown in equipment purchases, analysts said.

"At a high level these are really strong results -- the initial stock reaction reflects some degree of 'is this the best and have we peaked out," said Kristen Owen, executive director at Oppenheimer & Co Inc.

Company executives attempted to reassure shareholders that dealer inventories are within the typical three to four month range and said they remain optimistic about sales in the coming quarters.

"I think this is a little bit misunderstood by the market, we are not in a situation where we are expecting, or allowing dealer inventories to become a headwind," CFO Andrew Bonfield told analysts on a conference call.

The Biden administration's infrastructure legislation has encouraged spending in the construction sector, spurring demand for the machinery maker's excavators, bulldozers and trucks.

Caterpillar's construction division recorded a 10% rise in total sales. Its energy customers also placed more orders for parts and engines as drilling activities surged with higher oil and gas prices.

The Texas-based company's resources and mining division profit rose 112% while sales in the company's energy and transportation segment saw a 24% increase year-on-year.

The company reported adjusted profit of $4.91 per share, beating Refinitiv analysts consensus forecast of $3.78 per share.

Caterpillar's revenue for the quarter through March 31 rose by 17% to $15.9 billion from $13.6 billion a year ago.