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MarketScreener Homepage  >  Equities  >  Nyse  >  Caterpillar Inc.    CAT


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Caterpillar offers cautious outlook after punishing quarter; shares drop

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07/31/2020 | 12:40pm EDT
FILE PHOTO: A row of excavators are seen at the Caterpillar booth at the CONEXPO-CON/AGG convention at the Las Vegas Convention Center in Las Vegas

Caterpillar Inc on Friday predicted no improvement in equipment sales, an outlook that sent its shares down after second-quarter earnings sank during a crippling recession sparked by the coronavirus pandemic, which made customers wary of big purchases.

The heavy equipment maker, a bellwether for economic activity, reported a 23% drop in retail sales in the second quarter and predicted a similar decline in the quarter through September. Caterpillar's outlook was bleaker than other industrial companies that have predicted the lifting of pandemic shutdowns will improve sales and its shares were last down 4.1% at $131.12.

Profits in the current quarter are not forecast to improve from the last three months.

Stephen Volkmann, equity analyst with Jefferies, said Caterpillar's outlook was an "outlier."

"Either they are being a little bit conservative or they have some visibility," he said.

The manufacturer said global economic uncertainty would continue to weigh on its results. It declined to reinstate full-year earnings guidance, withdrawn in late March. Share repurchases will also remain suspended this year.

Caterpillar's earnings came a day after the U.S. economy reported its deepest contraction since the Great Depression.

The world's largest economy shrank at a 32.9% annualized rate last quarter with a 37.7% plunge in spending on equipment, and a resurgence in new coronavirus cases has dimmed the outlook for the current quarter.

The international outlook also remained grim, with the International Monetary Fund predicting deeper contraction in global output this year.

Reflecting weak equipment demand, Caterpillar raised its estimates for reduction in dealer inventories to more than $2 billion this year from $1.5 billion estimated earlier.

"It's a very fluid dynamic situation," Chief Executive Officer Jim Umpleby said on an earnings call.

In response, it has cut production and is keeping a lid on costs. It is prioritizing investment in services business, which is expected to hold up better than equipment revenue in the downturn.

Revenue in the latest quarter was down an annual 31% with a double-digit decline in equipment sales across all regions. Cost cuts cushioned the hit on profit, which came in at 84 cents per share, down 70% year-on-year.

By Rajesh Kumar Singh

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Financials (USD)
Sales 2020 41 566 M - -
Net income 2020 2 944 M - -
Net Debt 2020 27 612 M - -
P/E ratio 2020 25,0x
Yield 2020 3,09%
Capitalization 72 773 M 72 773 M -
EV / Sales 2020 2,42x
EV / Sales 2021 2,25x
Nbr of Employees 102 300
Free-Float 66,3%
Duration : Period :
Caterpillar Inc. Technical Analysis Chart | CAT | US1491231015 | MarketScreener
Technical analysis trends CATERPILLAR INC.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 27
Average target price 143,43 $
Last Close Price 134,39 $
Spread / Highest target 50,3%
Spread / Average Target 6,73%
Spread / Lowest Target -24,8%
EPS Revisions
Donald James Umpleby Chairman & Chief Executive Officer
Andrew Robert John Bonfield Chief Financial Officer
Karl E. Weiss Chief Technology Officer
Julie A. Lagacy Chief Information Officer & Vice President
William A. Osborn Independent Director