Caterpillar Slow to Start Week Focused on Earnings and Economic Reports

Andrew Klips  |

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Stocks in the United States are looking to rebound from last Friday that brought about a 205 point plunge in the Dow Jones Industrial Average, its worst single-day performance since June.  With little coming from the euro zone last week and probably little coming again this week (unless Spain finally caves-in and requests a bailout from the European Central Bank), earnings and the economic data slate will be firmly in focus again this week.
Caterpillar Inc. (CAT) has already kicked-off the earnings news from majors on Monday with a jump in third quarter earnings of 49 percent, but followed that by lowering its 2012 earnings outlook, citing soft global economic conditions.  The world’s biggest maker of bulldozers and other construction machinery said that it now expects earnings per share between $9 and $9.25 and revenue of roughly $66 billion, compared to previous estimates of per share earnings of $9.60 and revenue of $68 to $70 billion. The decreased outlook is now shy of analyst estimates of 2012 profit of $9.40 per share on revenue of $67.64 billion.
For the quarter, Caterpillar recorded profit of $1.7 billion (including a $273 million gain from the sale of a business asset), or $2.54 per share, as compared to $1.14 billion, or $1.71 per share, in the same period last year.  Revenue climbed to $16.45 billion while analysts looked for $16.77 billion.
Also coming in lower than analysts predicted were Cat’s expectations for 2013 with the company calling-for revenue plus or minus 5 percent of 2012 sales.  Wall Street was expecting 6 percent growth in per share earnings and revenue expansion of 4 percent during next year.
"We are taking a pragmatic view of 2013--we're not expecting rapid growth, and we're not predicting a global recession," said Doug Oberhelman, Chairman and CEO at Caterpillar.
Caterpillar, widely-followed as a barometer of global economic health, has seen shares drop by more than 7 percent in 2012.  Shares closed Friday at $83.86 and are in the red again this morning.
Yahoo! Inc. (YHOO) will be in investors’ crosshairs after the market closes today as new CEO Marissa Mayer will make her first appearance delivering the internet company’s latest quarter results.
All told, 140 S&P 500 companies will report earnings this week.
On the economic slate, data will slow-down compared to last week’s litany of info from Washington.  Market moving reports will include, New Home Sales from September and the latest policy meeting announcement from the Federal Open Market Committee on Wednesday; Durable Goods orders from September and the Labor Department’s report on Initial Jobless Claims for the week ended October 20 on Thursday; and a the reading on Gross Domestic Product for the third quarter from the Commerce Department on Friday.

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