Capital Goods Sector Review: Caterpillar Earnings Preview, Defense Spending Cuts

Caterpillar Inc. (NYSE:CAT) is expected to report Q4 earnings on Thursday, January 26 before the market open with a conference call scheduled for 11:00 am ET. Analysts are looking for EPS of $1.73 on revenue of $16.05B. The consensus range is $1.56-$1.91 for EPS and revenue of $15.43B-$17.46B, according to First Call. Caterpillar reported positive results in Q3, beating both EPS and revenue estimates. On its Q3 earnings report, the company raised the upper end of its FY11 EPS forecast to $7.25 (ex-Bucyrus) from $6.75-$7.25 vs. consensus of $6.59. It also raised its FY11 revenue estimate to “about” $58B from $56B-$58B vs. consensus $55.72B. Management said 2012 was shaping up to be “better” than 2011, and that it was continuing to boost production levels for many products. The shares moved sharply higher following Q3 results, rallying about 18%. They currently sit approximately 10 points from 52-week highs of $116.55, made in May of last year.

The shares closed at $109.05, up $2.76, or 2.6%, on the day. Its market capitalization is $70.51 billion.

The Boeing Company (NYSE:BA) and Norwegian have announced a firm order for 100 fuel-efficient 737 MAX airplanes and 22 Next-Generation 737-800s. The total order is valued at $11.4B at list prices and represents the largest-ever Boeing order from a European airline. Oslo-based Norwegian is the first European carrier to finalize an order for the 737 MAX. The order supports Norwegian’s plans to build on the success provided by its fleet of Next-Generation 737-800s for its rapidly expanding operations. This order continues the momentum for the 737 MAX. With the Norwegian order, the 737 MAX has orders and commitments for more than 1,000 airplanes from 15 customers and the Next-Generation 737 family has orders for more than 6,300 airplanes.

The shares closed at $75.82, up $0.46, or 0.61%, on the day. Its market capitalization is $56.35 billion.

General Dynamics Corp. (NYSE:GD): Defense Secretary Leon Panetta, who will discuss the outlines of his budget request for the 2013 fiscal year on Thursday, is expected to propose cutting $260B in spending through 2017, reported Reuters. Among the cuts, Lockheed’s (NYSE:LMT) F-35 jet fighter program may see 179 jets cut from the five-year budget and their purchase pushed to later years.

The shares closed at $71.57, up $0.23, or 0.32%, on the day. Its market capitalization is $25.49 billion.

W.W. Grainger, Inc. (NYSE:GWW) backs FY12 revenue growth view of 10%-14%. Consensus: $8.91B.

The shares closed at $195.17, down $8.34, or 4.1%, on the day. Its market capitalization is $13.61 billion.

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