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Caterpillar (CAT) Hurt by Weak Markets, Sales Fall Yet Again
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Caterpillar, Inc.’s (CAT - Free Report) global retail sales for the three-month period ending Nov 2016 plunged 17%. So far this year, Caterpillar’s monthly sales have posted an average decline of 15%. The company’s sales growth has been in the red for an unprecedented stretch of 48 consecutive months.
The four straight years of monthly sales decline is much aggravated from the last 19-month long stretch spanning from Oct 2008 to Apr 2010 wherein the company had suffered the same fate due to recession.
Caterpillar results continue to bear the brunt of a stronger dollar and low-end user demand across many of the company’s businesses due to economic weakness throughout the world. Nevertheless, the Caterpillar stock has outperformed the Zacks Categorized Machinery – Construction/Mining industry.
The stock has gained from speculations that the mining and construction equipment behemoth will be a major beneficiary if Trump stays true to his promise of infrastructure improvements. A look at Caterpillar’s price performance since Nov 9 reveals that the company has delivered a return of 3.4%, clearly outpacing the abovementioned Zacks sub industry’s gain of 2.9%.
As per the company’s Nov 2016 sales report, overall performance was dragged down by a 32% slump in Latin America. Sale continues to fall in the Europe, Africa and Middle East (EAME) and in North America with declines of 26% and 19%, respectively. Asia Pacific region remains the only bright spot, which saw 11% rise in sales. The region has been exhibiting strength since August with the growth graph picking up from single digits to double digits.
Overall sales at Resource Industries, which continues to bear the brunt of weak mining spending due to lower commodity prices, were down 24%. Latin American sales witnessed the maximum decline of 37%, followed by a 30% drop in EAME and 28% drop in North America. The Asia Pacific region was the exception, recording a 7% increase.
Sales in Construction Industries decreased 15% year over year, primarily hit by the 30% slump in Latin America. Sales in EAME and North America were down 24% and 17%, respectively. On the contrary, the Asia-Pacific regions recorded an increase of 11%.
Sales in the Energy & Transportation segment fell 25% mainly due to a 32% plunge in the Transportation sector. Sales in the Power Generation sector declined 31% followed by the 24% decrease in the Industrial sector. Further, the Oil & Gas sector declined 17%.
In construction, Asia Pacific is showing promise of late and leading indicators of U.S. non-residential construction signal robust conditions ahead for the domestic construction industry. To counteract the effect of weak mining on its top line, Caterpillar tenaciously continues to cut down costs and reduce capacity. This along with other restructuring actions, and share repurchases will aid the mining behemoth to stay afloat despite weak demand.
Caterpillar currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the sector include ACCO Brands Corp. (ACCO - Free Report) , EnerSys (ENS - Free Report) and John Bean Technologies Corp. (JBT - Free Report) . ACCO Brands witnessed a 4% increase in earnings estimates in the last 60 days. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EnerSys also sports a Zacks Rank #1 and its earnings estimates have gone up 4% in the last 60 days. John Bean Technologies, another Zacks Rank #1 stock, has seen earnings estimates move north by 2% over the same time frame.
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Caterpillar (CAT) Hurt by Weak Markets, Sales Fall Yet Again
Caterpillar, Inc.’s (CAT - Free Report) global retail sales for the three-month period ending Nov 2016 plunged 17%. So far this year, Caterpillar’s monthly sales have posted an average decline of 15%. The company’s sales growth has been in the red for an unprecedented stretch of 48 consecutive months.
The four straight years of monthly sales decline is much aggravated from the last 19-month long stretch spanning from Oct 2008 to Apr 2010 wherein the company had suffered the same fate due to recession.
Caterpillar results continue to bear the brunt of a stronger dollar and low-end user demand across many of the company’s businesses due to economic weakness throughout the world. Nevertheless, the Caterpillar stock has outperformed the Zacks Categorized Machinery – Construction/Mining industry.
The stock has gained from speculations that the mining and construction equipment behemoth will be a major beneficiary if Trump stays true to his promise of infrastructure improvements. A look at Caterpillar’s price performance since Nov 9 reveals that the company has delivered a return of 3.4%, clearly outpacing the abovementioned Zacks sub industry’s gain of 2.9%.
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As per the company’s Nov 2016 sales report, overall performance was dragged down by a 32% slump in Latin America. Sale continues to fall in the Europe, Africa and Middle East (EAME) and in North America with declines of 26% and 19%, respectively. Asia Pacific region remains the only bright spot, which saw 11% rise in sales. The region has been exhibiting strength since August with the growth graph picking up from single digits to double digits.
Overall sales at Resource Industries, which continues to bear the brunt of weak mining spending due to lower commodity prices, were down 24%. Latin American sales witnessed the maximum decline of 37%, followed by a 30% drop in EAME and 28% drop in North America. The Asia Pacific region was the exception, recording a 7% increase.
Sales in Construction Industries decreased 15% year over year, primarily hit by the 30% slump in Latin America. Sales in EAME and North America were down 24% and 17%, respectively. On the contrary, the Asia-Pacific regions recorded an increase of 11%.
Sales in the Energy & Transportation segment fell 25% mainly due to a 32% plunge in the Transportation sector. Sales in the Power Generation sector declined 31% followed by the 24% decrease in the Industrial sector. Further, the Oil & Gas sector declined 17%.
CATERPILLAR INC Price
CATERPILLAR INC Price | CATERPILLAR INC Quote
In construction, Asia Pacific is showing promise of late and leading indicators of U.S. non-residential construction signal robust conditions ahead for the domestic construction industry. To counteract the effect of weak mining on its top line, Caterpillar tenaciously continues to cut down costs and reduce capacity. This along with other restructuring actions, and share repurchases will aid the mining behemoth to stay afloat despite weak demand.
Caterpillar currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the sector include ACCO Brands Corp. (ACCO - Free Report) , EnerSys (ENS - Free Report) and John Bean Technologies Corp. (JBT - Free Report) . ACCO Brands witnessed a 4% increase in earnings estimates in the last 60 days. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
EnerSys also sports a Zacks Rank #1 and its earnings estimates have gone up 4% in the last 60 days. John Bean Technologies, another Zacks Rank #1 stock, has seen earnings estimates move north by 2% over the same time frame.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time? Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>