We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Buy Caterpillar Stock Ahead of Q2 Earnings, Stay for the Dividend?
Read MoreHide Full Article
Caterpillar (CAT - Free Report) is set to release its second quarter fiscal 2020 financial results before the opening bell on Friday, July 31. Wall Street will be watching CAT closely for signs of economic recovery, as fears of an uptick in coronavirus cases mount.
Quick Economic Overview
Gold prices hit another record Monday, with the precious metal now up 27% this year, while Silver prices have also surged. The climbs come as economic reopening plans are hampered by increasing Covid-19 cases, alongside tensions between the U.S. and China. Meanwhile, the U.S. dollar just recently touched two-year lows, as investors see interest rates remaining low and the road to recovery perhaps taking longer than initially projected.
Caterpillar withdrew its 2020 outlook in March based on coronavirus uncertainty and it fell short of first quarter estimates. The Deerfield, Illinois-based firm also temporarily suspended operations at some facilities “due to supply chain issues, weak customer demand or government regulations.”
CAT said that as of mid-April, approximately 75% of its primary production facilities globally and across the three primary segments continued to operate. And it noted that some facilities that were closed had already reopened.
Despite the economic downturn and uncertainty, CAT has surged 50% since the market’s lows to outpace the S&P 500’s 45%. And CAT shares have surged 11% in the last month to double the market and top its industry, as investors look to an economic recovery, of which there are signs in the U.S. manufacturing sector.
Bottom Line
Moving on, our current Zacks estimates call for Caterpillar’s adjusted Q2 earnings to slip 77% to $0.66 a share, on 36% lower revenue that would see it hit $9.2 billion. Peeking further ahead, CAT’s third quarter outlook shows signs of recovery and it has seen its longer-term earnings revisions climb recently, as the nearby chart highlights.
CAT also earns a “B” grade for Value in our Style Scores system. Better still, its 2.96% dividend yield crushes its industry’s 1.76% average and the S&P 500. Caterpillar stock rests 6% off its 52-week highs, which means it might have room to climb if it’s able to provide upbeat guidance.
Investors might want to wait until it reports. But CAT’s business will bounce back eventually and its dividend provides solid income amid the uncertainty, especially with interest rates so low. And the construction and mining equipment powerhouse has weathered economic downturns before, within the cyclical industrial space.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Buy Caterpillar Stock Ahead of Q2 Earnings, Stay for the Dividend?
Caterpillar (CAT - Free Report) is set to release its second quarter fiscal 2020 financial results before the opening bell on Friday, July 31. Wall Street will be watching CAT closely for signs of economic recovery, as fears of an uptick in coronavirus cases mount.
Quick Economic Overview
Gold prices hit another record Monday, with the precious metal now up 27% this year, while Silver prices have also surged. The climbs come as economic reopening plans are hampered by increasing Covid-19 cases, alongside tensions between the U.S. and China. Meanwhile, the U.S. dollar just recently touched two-year lows, as investors see interest rates remaining low and the road to recovery perhaps taking longer than initially projected.
This week will likely be the one of, if not the most important stretch of the second quarter earnings season, with reports due out from Amazon (AMZN - Free Report) , Apple (AAPL - Free Report) and two other FAANG firms, as well as Boeing (BA - Free Report) , Visa (V - Free Report) , Procter & Gamble (PG - Free Report) , 3M (MMM - Free Report) , Mcdonald's (MCD - Free Report) , Pfizer (PFE - Free Report) , and countless others.
Investors should also note that there have been early signs of an improving earnings outlook in the second half of 2020 (also read: The Technology Sector Shows its Earnings Power Amid Coronavirus).
What’s Up with CAT?
Caterpillar withdrew its 2020 outlook in March based on coronavirus uncertainty and it fell short of first quarter estimates. The Deerfield, Illinois-based firm also temporarily suspended operations at some facilities “due to supply chain issues, weak customer demand or government regulations.”
CAT said that as of mid-April, approximately 75% of its primary production facilities globally and across the three primary segments continued to operate. And it noted that some facilities that were closed had already reopened.
Despite the economic downturn and uncertainty, CAT has surged 50% since the market’s lows to outpace the S&P 500’s 45%. And CAT shares have surged 11% in the last month to double the market and top its industry, as investors look to an economic recovery, of which there are signs in the U.S. manufacturing sector.
Bottom Line
Moving on, our current Zacks estimates call for Caterpillar’s adjusted Q2 earnings to slip 77% to $0.66 a share, on 36% lower revenue that would see it hit $9.2 billion. Peeking further ahead, CAT’s third quarter outlook shows signs of recovery and it has seen its longer-term earnings revisions climb recently, as the nearby chart highlights.
CAT also earns a “B” grade for Value in our Style Scores system. Better still, its 2.96% dividend yield crushes its industry’s 1.76% average and the S&P 500. Caterpillar stock rests 6% off its 52-week highs, which means it might have room to climb if it’s able to provide upbeat guidance.
Investors might want to wait until it reports. But CAT’s business will bounce back eventually and its dividend provides solid income amid the uncertainty, especially with interest rates so low. And the construction and mining equipment powerhouse has weathered economic downturns before, within the cyclical industrial space.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>