Caterpillar Earnings: Here’s Why the Stock is Popping Now

Caterpillar Inc. (NYSE:CAT) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are up 2.5%.

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Caterpillar Inc. Earnings Cheat Sheet

Results: Net income decreased -54.95% to $697 million ($1.91 per diluted share) in the quarter versus a net gain of $1.55 billion in the year-earlier quarter.

Revenue: Decreased 6.74% to $16.08 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Caterpillar Inc. reported adjusted net income of $1.91 per share. By that measure, the company beat the mean analyst estimate of $1.7. It missed the average revenue estimate of $16.12 billion.

Quoting Management: “Based on softening economic conditions and the amount of inventory we had available in our Product Distribution Centers, dealers also took action to lower their inventories. As a result, new orders from dealers declined sharply in Q3, and we began lowering production schedules and incoming material from suppliers around the world. While production schedules began to decline in Q3, the most significant impacts on production and the flow of incoming material were in Q4. Our actions, coupled with dealer inventory reductions, had a significant negative impact on Q4 sales and profit. For sales, the negative impact of dealer inventory changes was about the same as the total co decline in sales and revenues from Q4 of 2011 to Q4 of 2012. The sales decline, along with the negative cost impact from lower production and declining inventory, were significantly unfavorable to profit.”

Key Stats:

Revenue decreased 2.22% from $16.45 billion in the previous quarter. Net income decreased 58.98% from $1.7 billion in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $1.91 to a profit $1.8. For the current year, the average estimate has moved down from a profit of $9.19 to a profit of $9.12 over the last ninety days.

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(Company fundamentals provided by Xignite Financials.)