Caterpillar Posts Mixed Q4 Results, Issues Weak FY 2020 View

Caterpillar Posts Mixed Q4 Results, Issues Weak FY 2020 View
February 3, 2020

 

Caterpillar Inc. (NYSE: CAT) reported fiscal 2019 fourth-quarter revenues that missed analysts’ estimates. However, the Q4 earnings increased from the similar period last year. The manufacturer of mining machinery also announced a weaker-than-anticipated outlook for FY 2020. Following the quarterly revenue miss and weak outlook, the stock lost 2.97% or $4.02 to close at $131.35. In January, the stock has seen more than 10% erosion in value. Notably, the stock gained roughly 16% in 2019.

The Deerfield, Illinois-based enterprise reported 4Q 2019 revenues of $13.14 billion, down 8.4% from $14.34 billion in the similar period last year.

For the recent quarter, the industrial conglomerate posted earnings of $1.10 billion, or $1.97 a share, compared with $1.05 billion, or $1.78 per share, in the prior-year quarter. Excluding charges, adjusted earnings for the Q4 2019 was $2.63 per share, an increase from $2.55 per share in Q4 2018. Analysts had anticipated the company to post earnings of $2.37 per share on revenues of $13.412 billion. The company pointed to “global economic uncertainty” for missing revenue estimates.

Segment-wise,

  • Construction sector sales declined 12% y-o-y to $5.20 billion
  • Resource equipment sales were $2.40 billion, down 14% on a y-o-y basis.
  • Energy and Transportation sales dropped 5% to $5.95 billion.

Chairman and CEO Jim Umpleby highlighted existing threats across the globe that affected the company’s revenue.

Umpleby said, “We expect continued global economic uncertainty to pressure sales to users in 2020 and cause dealers to further reduce inventories. We have improved our lead times and remain prepared to respond quickly to any positive or negative changes in customer demand.”

Going forward, Caterpillar also issued a weaker-than-anticipated outlook for fiscal 2020, forecasting earnings of $8.50 to $10 per share. The Street analysts are anticipating earnings of $10.63 per share for the full-year 2020. When the US-China trade war hit its peak last year, Caterpillar’s earnings got hit on a sharp increase in the cost of raw materials and import duties. The quarterly revenue miss and gloomy FY 2020 view are expected to keep the stock bearish in the days ahead.

The historical price chart indicates that the stock has closed below its 50-day moving average after facing resistance at 150. The next major support is anticipated at 115. Furthermore, the stochastic indicator is making new lows. Therefore, we are expecting the stock of Caterpillar to remain in a downtrend in the days to come.

cat - technical analysis - 3rd Feb 2020

Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.

Ian Maguire

Ian Maguire

Ian is our resident contributor to the latest going ons in the cryptomarket, keeping up to date with the latest icos and coins


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