Caterpillar Inc. (CAT - Free Report) , a Zacks Ranked #1 (Strong Buy), is the world's largest manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The company is one of only a handful of U.S. companies that leads its industry while competing globally from a principally domestic manufacturing base. The company records more than half of its sales to overseas customers. Their products are used in the construction, road building, mining, forestry, energy, transportation and material-handling industries.
Recent Earnings Report
Last week, Caterpillar reported Q2 17 earnings where they easily beat both the Zacks consensus earnings and revenue estimates. On a year over year basis, second quarter sales rose by +9.7%, profit per share improved by +45.2%, and adjusted profit per share (including restructuring costs) was up by +36.7%.
Management Raises Future Guidance
Due to increased demand across several segments, and efficient cost control, management increased both sales, and profit per share guidance for FY 17. Sales guidance was raised from a range of $38-41 billion to a range of $42-44 billion. Profit per share was lifted from $2.10 to $3.50.
According to Jim Umpleby, CEO, “Our team delivered an impressive quarter. As demand increased, we continued to control costs and generated higher profit margins. While a number of our end markets remain challenged, construction in China and gas compression in North America were highlights in the quarter. Mining and oil-related activities have come off of recent lows, and we are seeing improving demand for construction in most regions.”
Mr. Umleby continued, “Given our performance in the first half of the year and current quotation and ordering activity, we are confident in raising our full-year 2017 outlook. We remain focused on serving our customers, delivering strong operational performance and executing our ongoing restructuring activities. During the second half of 2017, we anticipate making targeted investments in initiatives that are important to our future competitiveness, including enhanced digital capabilities and accelerating technology updates to our products. We intend to do this without adding to the structural costs we’ve worked so hard to streamline. These investments will prepare us to take advantage of the growth opportunities ahead.”
Price and Earnings Consensus Graph
Due to the strong earnings report, and subsequent raise in guidance, the company’s stock price and future earnings estimates have increased.