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Commodities & Metals

Caterpillar Challenging New Highs On Earnings and Guidance (CAT)

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By Jon C. Ogg Updated Published
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Caterpillar Inc. (NYSE: CAT) is showing that earnings on strong in infrastructure.  The giant equipment maker posted earnings of $1.22 EPS and revenues of $11.1 billion.  Thomson Reuters had estimates of $1.09 EPS and $10.48 billion in revenues.  This translated to 96% earnings growth and 53% revenue growth.

The news gets better on the annual guidance as well.  Caterpillar is raising its 2010 guidance to $3.80 to $4.00 EPS from a previous range of $3.15 to $3.85 EPS.  It is also lifting sales targets to $41 to $42 billion from $39 to $42 billion.  Thomson Reuters has annual projections of $3.71 EPS and $39.66 billion in revenues.

The company is offering a very preliminary guidance for 2011 as well.  The company expects that sales and revenues will approach $50 billion.  While that is not firm guidance, Thomson Reuters has estimates of $45.56 billion in 2011 revenue expectations.

The company cited “aggressively managing costs and improving cash flow” at the same time that it increased production to meet customer demand.  As far as what is driving the ship ahead, Caterpillar noted that continuing economic growth in the developing world has been the key to its improving sales.  Sales in developed countries have also improved substantially after 2009 was marred by deep declines.

Another catalyst is that dealer new machine inventories and rental fleets have remained relatively flat at the same time that the age of rental fleets has not improved.  This is expected to be a positive underlying issue ahead.

Caterpillar is already responding positively to the news.  Shares closed at $80.32 Wednesday and shares are indicated up above $82.00 in early bidding indications.  Keep in mind that this will mark 52-week highs if it holds.  The prior 52-week range is $505.50 to $81.19.  Shares are now back right around the early 2008 highs.

JON C. OGG

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About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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