Caterpillar Gears Up for Q3 Earnings

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Caterpillar Inc. (NYSE: CAT) is scheduled to report its third-quarter financial results before the markets open on Tuesday. This has been the best performing Dow stock in 2016, easily beating out any other in the index by at least 7%. The question is whether Caterpillar can continue its run to close out the year, and it starts with this earnings report.

The consensus estimates from Thomson Reuters are $0.77 in earnings per share (EPS) and $9.84 billion in revenue. In the same period of last year, Caterpillar posted EPS of $0.75 and $10.96 billion in revenue.

Despite a solid second quarter, management took a cautious perspective going into the second half of the year. CEO Doug Oberhelman said the company was not expecting an upturn in important industries like mining, oil and gas and rail to happen this year.

However, Caterpillar is continuing significant restructuring plans, which are designed to bring its cost structure more in line with demand while maintaining capability to quickly serve customers when its business recovers.

In that vein, the company recently announced that it is closing a plant in Belgium, eliminating 2,200 jobs. Analysts, always partial to restructuring that increases returns, have been kind to the company by setting some pretty low hurdles for earnings and revenues.

Prior to the release of the earnings report, analysts weighed in on Caterpillar:

  • Jefferies reiterated a Hold rating with an $80 price target.
  • Barclays has an Equal Weight rating with a $90 price target.
  • Goldman Sachs has a Buy rating with a $112 price target.
  • Merrill Lynch has a Hold rating with a $92 price target.
  • Credit Suisse has a Buy rating.
  • Citigroup has a Hold rating.

So far in 2016, Caterpillar has outperformed the broad markets with the stock up 27%. Over the past 52 weeks, the stock is up nearly 21%.

Shares of Caterpillar were trading at $86.18 on Monday, with a consensus analyst price target of $79.56 and a 52-week trading range of $56.36 to $89.87.