Caterpillar Growth Momentum in Focus Amid Global Upswing -- Earnings Preview
24 Januar 2018 - 10:43PM
Dow Jones News
By Andrew Tangel
Caterpillar Inc.'s stock surged in 2017 as many of the heavy
machinery maker's markets around the world showed signs of
turnaround. The Deerfield, Ill.-based manufacturer is due to report
fourth-quarter earnings Thursday, 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 $1.50 in the fourth quarter, according to Thomson Reuters,
compared with a loss of $2.00 the same quarter the prior year.
REVENUE FORECAST: Analysts expect $12 billion of revenue in the
quarter, up from $9.6 billion a year earlier. In October,
Caterpillar said it expected revenue of about $44 billion for all
of 2017. Analysts expect full-year revenue of $44.5 billion, up
from $38.5 billion in 2016.
TAX HIT, LIFT: Caterpillar held $16 billion in profits overseas
in 2016, according to Audit Analytics. Recent changes to U.S. tax
policy, signed into law by President Donald Trump in late December,
could lead Caterpillar to book a one-time charge related to those
profits. Analysts and investors will likely look for estimates of
how the new tax law would change Caterpillar's effective tax rate,
spur capital investments or make other changes. Also of interest
may be whether Caterpillar will change a Swiss tax structure that
is subject to a continuing criminal investigation. The company
hasn't been accused of wrongdoing and has said it believes its tax
position is correct.
GLOBAL UPSWING: Caterpillar's mining and construction markets
around the world have showed signs of turnaround throughout 2017.
The company said Wednesday a rolling three-month average of global
retail sales of its machinery rose 34% in December, up from 26% in
November. Some of the questions that may be on investors' and
analysts' minds: How long might global growth accelerate? Is
China's growth slowing or accelerating? What about North America,
particularly with a U.S. construction market still waiting for
President Donald Trump's plan to upgrade America's
infrastructure?
MANUFACTURING: Caterpillar has been hiring in the U.S. this
year, a shift following years of deep cuts in its domestic
workforce. The company may provide clues to whether it is
continuing to ramp up production domestically and internationally.
It may also signal any shifts in production because of tax or trade
policy.
VICTORY LAP: Caterpillar stock rose nearly 70% during the first
year of Chief Executive Jim Umpleby's tenure at the top of the
company. Mr. Umpleby, who took over his current role at the start
of 2017, is focusing the company on profitable growth, rather than
just increasing revenue and market share. Investors will likely be
looking for signs of progress or setbacks in Mr. Umpleby's
efforts.
Write to Andrew Tangel at Andrew.Tangel@wsj.com
(END) Dow Jones Newswires
January 24, 2018 16:28 ET (21:28 GMT)
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