Caterpillar Earnings: What to Watch
23 Oktober 2017 - 6:01PM
Dow Jones News
By Andrew Tangel
Caterpillar Inc.'s stock has surged more than 50% over the past
12 months, and on Monday the company said retail sales of its heavy
machines accelerated overall world-wide in September. The
Deerfield, Ill.-based manufacturer is due to report third-quarter
earnings Tuesday, providing clues to the health of the global
economy.
Here's what to watch for:
EARNINGS FORECAST: Wall Street analysts expect earnings per
share of $1.11 in the third quarter, according to Thomson Reuters,
compared with 48 cents the same quarter last year. In July,
Caterpillar said it expected earnings per share for the full year
to be $3.50 at the midpoint of its revenue outlook.
REVENUE FORECAST: Analysts expect $10.6 billion of revenue in
the quarter, up from $9.2 billion a year earlier. In July,
Caterpillar said it expected revenue of $42 billion to $44 billion
for all of 2017, up from a previous forecast of as much as $41
billion.
GLOBAL OPTIMISM: In July, Caterpillar signaled cautious optimism
about the global economy, saying that many of its construction and
mining markets were showing signs of improvement. Will the trend
continue? Caterpillar said Monday a three-month rolling average of
retail sales increased 13% in September compared with the same
month the previous year, up from 11% growth in August. The company
has previously cited growth in China's construction sector and
signs of life in the long-struggling mining industry. In July, the
company boosted its earnings outlook for the year, even in the face
of sluggish spending on public works projects in the U.S. and
weakness in Brazil and the Middle East.
CEO STRATEGY: Chief Executive Jim Umpleby, who took over his
current role on Jan. 1, outlined his management strategy in
September. A prime focus is profitable growth, rather than just
increasing revenue and market share, with a focus on parts and
services. Investors will likely be looking for any signs of
progress in boosting Caterpillar's profit margins.
MANUFACTURING: In July, Caterpillar said its U.S. payroll grew
to 48,500 employees by the end of June, an increase of 2,000 over
the previous three months. The company said it was hiring at
factories in Illinois, Indiana and Arkansas. The hiring marked a
shift, given the waves of layoffs the company has endured in recent
years amid a prolonged slump in global commodities and
construction. Investors will likely look for signs of a continued
production ramp-up, as well as any commentary on U.S. trade, tax
and infrastructure policy.
Write to Andrew Tangel at Andrew.Tangel@wsj.com
(END) Dow Jones Newswires
October 23, 2017 11:46 ET (15:46 GMT)
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