Caterpillar reports better-than-expected earnings

Caterpillar said it now expects full year profit per share between $12.06 and $13.06, citing a tax benefit of 31 cents per share. Read more...

Caterpillar reported better than expected earnings and revenue on Wednesday.

Here’s how they did compared to what Wall Street expected:

• Earnings: $2.94 per share vs. $2.85 per share, forecast in a survey of analysts by Refinitiv
• Revenue: $13.47 billion vs. $13.40 billion, forecast by Refinitiv

In the year ago quarter, the company reported adjusted earnings per share of $2.82 on $12.9 billion in revenue.

Shares of Caterpillar initially rose about 1% in pre-market trading, but were last seen trading about 2% lower.

The stock reversed after Bloomberg reported that Caterpillar CFO Andrew Bonfield said the company’s China sales are being hurt by aggressive price competition. While construction demand in China is expected to grow, Bloomberg reported that Bonfield the company may lose a “little bit” of market share in the country.

The industrial giant also raised its 2019 profit outlook. Caterpillar said it now expects full year profit per share between $12.06 and $13.06, citing a tax benefit of 31 cents per share. Caterpillar said its first quarter tax benefit of $178 million stems from U.S. tax reform. The company previously expected $11.75 a share to $12.75 a share.

Sales in the Asia Pacific region grew 9% year over year to $3.20 billion.

In January, the stock plunged after Caterpillar reported disappointing fourth-quarter earnings. The equipment manufacturer, considered a proxy for the global economy, said tariffs and a slowdown in sales in China impacted profit.

For the full year, however, the company posted record profit of $11.22 a share, up 63 percent from a year earlier. Full-year sales also rose by 20 percent.

In February, UBS gave Caterpillar a rare double downgrade from “buy” to “sell,” as analysts warned that an earnings decline in 2020 had not yet been priced into the stock.

The stock has since rebounded, however, and is up 12% so far in 2019. Over the past 12 months, it is down 7%.

Read more