Caterpillar Inc. (CAT - Free Report) has begun 2017 on a positive note, delivering year-over-year improvement in both the first quarter 2017 top line and bottom line for the first time in 10 quarters. First-quarter 2017 adjusted earnings came in at $1.28 per share that handily beat the Zacks Consensus Estimate of 62 cents and also doubled from prior-year quarter’s earnings of 64 cents.
The better-than-expected results came on the back of the company’s incessant efforts to cut down costs to counter the impact of low-end user demand across many of its businesses. Additionally, the company’s shares advanced 6.52% in pre-market trading, following the release.
Including one-time items such as restructuring costs, Caterpillar reported earnings per share of 32 cents in the quarter, down 3.8% from 46 cents in the prior-year quarter.
Revenues
Revenues improved 3.8% year over year to $9.8 billion in the quarter, surpassing the Zacks Consensus Estimate of $9.36 billion. Favorable price realization and higher sales volume, with the most significant increase in Resource Industries mostly owing to higher end-user demand for aftermarket parts led to the improvement.
Caterpillar witnessed a 14% rise in sales in Latin America primarily due to stabilizing economic conditions in several countries in the region that helped pick up end-user demand. Revenues increased 12% in Asia Pacific driven by increase in construction equipment sales in China resulting from increased infrastructure and residential investment. Further, higher commodity prices and increased mining production favorably impacted demand for aftermarket parts in Australia. Sales in EAME inched up 2%.
In North America, sales were flat as by lower end-user demand for new equipment and the negative impact of changes in dealer inventories resulting from increased inventories in first-quarter 2016 than in the first-quarter 2017 offset higher demand for aftermarket parts. Increased demand for oil and gas applications were also negated by lower sales for infrastructure construction equipment.
Costs & Operating Profit
In the quarter, cost of sales dipped 0.9% year over year to $6.758 billion. Gross profit rose 16% to $3.1 billion. Selling, general and administrative (SG&A) expenses decreased 4% to $1.05 billion. Research and development (R&D) expenses declined 18% year over year to $418 million.
Adjusted operating profit improved 53% year over year to $1.6 billion owing to higher sales volume. Lower period costs, improved variable manufacturing costs and favorable price realization also aided the increase. About half of the variable manufacturing cost improvement was from lower material costs, and price realization was favorable in Construction Industries.
Caterpillar, Inc. Price, Consensus and EPS Surprise
Zacks Rank & Other Key Picks
Caterpillar currently sports a Zacks Rank #1 (Strong Buy).
Other top-ranked stocks worth considering in the same sector are Donaldson Company, Inc. (DCI - Free Report) , Casella Waste Systems, Inc. (CWST - Free Report) and Parker-Hannifin Corporation (PH - Free Report) . All the three stocks flaunt the same rank as Caterpillar. You can see the complete list of today’s Zacks #1 Rank stocks here.
Donaldson Company has an average positive earnings surprise of 5.93% in the trailing four quarters. Casella Waste generated an outstanding average positive earnings surprise of 165.21% in the past four quarters, while Parker-Hannifin has an average positive earnings surprise of 12.44% in the last four quarters.
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Caterpillar Inc. (CAT - Free Report) has begun 2017 on a positive note, delivering year-over-year improvement in both the first quarter 2017 top line and bottom line for the first time in 10 quarters. First-quarter 2017 adjusted earnings came in at $1.28 per share that handily beat the Zacks Consensus Estimate of 62 cents and also doubled from prior-year quarter’s earnings of 64 cents.
The better-than-expected results came on the back of the company’s incessant efforts to cut down costs to counter the impact of low-end user demand across many of its businesses. Additionally, the company’s shares advanced 6.52% in pre-market trading, following the release.
Including one-time items such as restructuring costs, Caterpillar reported earnings per share of 32 cents in the quarter, down 3.8% from 46 cents in the prior-year quarter.
Revenues
Revenues improved 3.8% year over year to $9.8 billion in the quarter, surpassing the Zacks Consensus Estimate of $9.36 billion. Favorable price realization and higher sales volume, with the most significant increase in Resource Industries mostly owing to higher end-user demand for aftermarket parts led to the improvement.
Caterpillar witnessed a 14% rise in sales in Latin America primarily due to stabilizing economic conditions in several countries in the region that helped pick up end-user demand. Revenues increased 12% in Asia Pacific driven by increase in construction equipment sales in China resulting from increased infrastructure and residential investment. Further, higher commodity prices and increased mining production favorably impacted demand for aftermarket parts in Australia. Sales in EAME inched up 2%.
In North America, sales were flat as by lower end-user demand for new equipment and the negative impact of changes in dealer inventories resulting from increased inventories in first-quarter 2016 than in the first-quarter 2017 offset higher demand for aftermarket parts. Increased demand for oil and gas applications were also negated by lower sales for infrastructure construction equipment.
Costs & Operating Profit
In the quarter, cost of sales dipped 0.9% year over year to $6.758 billion. Gross profit rose 16% to $3.1 billion. Selling, general and administrative (SG&A) expenses decreased 4% to $1.05 billion. Research and development (R&D) expenses declined 18% year over year to $418 million.
Adjusted operating profit improved 53% year over year to $1.6 billion owing to higher sales volume. Lower period costs, improved variable manufacturing costs and favorable price realization also aided the increase. About half of the variable manufacturing cost improvement was from lower material costs, and price realization was favorable in Construction Industries.
Caterpillar, Inc. Price, Consensus and EPS Surprise
Zacks Rank & Other Key Picks
Caterpillar currently sports a Zacks Rank #1 (Strong Buy).
Other top-ranked stocks worth considering in the same sector are Donaldson Company, Inc. (DCI - Free Report) , Casella Waste Systems, Inc. (CWST - Free Report) and Parker-Hannifin Corporation (PH - Free Report) . All the three stocks flaunt the same rank as Caterpillar. You can see the complete list of today’s Zacks #1 Rank stocks here.
Donaldson Company has an average positive earnings surprise of 5.93% in the trailing four quarters. Casella Waste generated an outstanding average positive earnings surprise of 165.21% in the past four quarters, while Parker-Hannifin has an average positive earnings surprise of 12.44% in the last four quarters.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can 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.
Click here for Zacks' private trades >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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