SAN FRANCISCO (MarketWatch) — Caterpillar Inc. on Thursday reported a significant jump in fourth-quarter profit, riding a higher demand for its earth-moving machinery during the recent commodities boom.

Caterpillar CAT, +1.77% shares struggled to find direction in early trading, hovering in flat territory. The Dow component eventually closed up fractionally at $96.63 and has now risen 81% in the past year amid a recovering U.S. economy and stock market.

Edward Jones analyst Jeff Windau, who rates the shares as buy, said the reason they didn’t see much of a pop at the open lies in the margins.

“Overall, it was a strong quarter,” he said. “But investors are a little concerned about the margin, which weakened a bit primarily because of raw materials costs.”

Windau, however, pointed out that Caterpillar, more so than other industrials, also benefits from higher raw material costs because its customers expand mining operations when prices rise.

That’s a tailwind that should help Caterpillar in the coming year, he added.

As for the fourth quarter, the Peoria, Ill.-based manufacturer said its earnings rose to $968 million, or $1.47 a share, from $232 million, or 36 cents a share a year earlier.

Sales rose 62% to $12.81 billion.

Analysts had expected the company to earn $1.27 a share on revenue of $11.72 billion, according to a survey by FactSet Research.

“We feel good about our performance in 2010, coming off a very challenging 2009,” Chairman and CEO Doug Oberhelman said. “Investments are being made in new product development, additional capacity and strategic acquisitions that position us well for long-term growth and profitability.”

Caterpillar said it expects 2011 profit of $6 a share, up from its 2010 level of $4.15 a share. Wall Street previously forecast 2011 earnings to come in at $5.84 a share.

For 2011, Caterpillar is looking for sales to exceed $50 billion, which would approach the record high set back in 2008. In October, the company said revenue for the year would approach $50 billion.