Sign up USA
Proactive Investors - Run By Investors For Investors

Caterpillar earnings beat, but shares tumble after CFO sees 1Q as 'high water mark for the year'

The company considered the bellwether of the global economy smashed Wall Street expectations on strong sales
Caterpillar's signature yellow machine
The heavy-equipment maker's shares crashed in afternoon trade

Caterpillar Inc. (NYSE:CAT) initially soared on Tuesday after the heavy machinery maker posted earnings that bested Wall Street analyst expectations but tumbled dramatically after management signaled the first quarter might be about as good as it gets.

Investors had initially cheered the results as Caterpillar had raised its 2018 profit outlook by US$2 per share over the previous quarter. But Bloomberg reported that on a conference call to discuss the results, Caterpillar CFO Brad Halverson said first-quarter adjusted profit per share “will be the high watermark for the year.”

Halverson also spooked industrials by saying that Caterpillar expected "steel and other commodity costs to be a headwind all year."

Caterpillar shares, which had gained as much as 3.6%, tumbled 6.4% to US$144.20 in afternoon trade.

Caterpillar reported stellar first-quarter earnings of US$2.82 per share on revenue of US$12.9bn. The Earnings Whisper number was US$2.25 per share. In a vote of confidence for the global economy, Caterpillar said in its earning statement that it saw continued strength for construction in North America and China.

Caterpillar said it expects 2018 earnings of US$10.25 to US$11.25 per share. The company's previous guidance was earnings of US$8.25 to $9.25 per share and the current consensus earnings estimate is $9.22 per share for the year ending December 31, 2018.

The company cited better-than-expected sales volume as the main driver of its improved full-year guidance.

In a note seen by Reuters, Citi upgraded shares of Caterpillar to Buy from Neutral on Monday, saying the industrial giant will benefit from improvements in the Chinese construction sector.

View full CAT profile View Profile

Caterpillar Inc. Timeline

Related Articles

1508431368_iplayco-wall.jpg
November 19 2017
When finalised, Iplayco will own the IP rights to the Play Mart and Play Planet brands, as well as the Play Planet line of business. .

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You understand that the Company receives either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate.

You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Copyright © Proactiveinvestors.com, 2018. All Rights Reserved - Proactive Investors North America Inc., Proactive Investors LLC

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use