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Caterpillar (CAT) to Report Q1 Earnings: What's in Store?
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Caterpillar Inc. (CAT - Free Report) is likely to register a decline in its bottom line, due to inflated costs and supply chain disruptions despite higher revenues on the back of strong demand, when it reports first-quarter 2022 results on Apr 28, before the opening bell. The Zacks Consensus Estimate for quarterly earnings per share for the quarter is currently pegged at $2.66, which indicates a 7% decline from the year-ago reported figure. The consensus mark for total sales stands at $13.5 billion, suggesting growth of 13.6% from the prior-year quarter.
Q4 Results & Surprise History
In the last reported quarter, Caterpillar delivered improved year-over-year performance in both its top and bottom lines, driven by higher demand in end markets and strong operational performance. Both sales and earnings beat the respective Zacks Consensus Estimate.
With the earnings beat in the last quarter, the mining and construction equipment behemoth maintained the streak of surpassing earnings estimates for seven consecutive quarters. CAT has a trailing four-quarter earnings surprise of 24.07%, on average.
The ongoing expansion in manufacturing activity has been reflecting on Caterpillar’s order book over the past few quarters. For the first quarter of 2022, total industrial production rose at an annual rate of 8.1%. Manufacturing output increased at an annual rate of 5.4%. These figures indicate that Caterpillar might have witnessed strong order levels over the course of the first quarter. This, along with the solid backlog of $23 billion reported at the end of the fourth quarter of 2021, may get reflected in Caterpillar’s first-quarter 2022 top line.
Supply chain headwinds, labor constraints currently faced by the industry, and inflated costs for raw materials and freight services are likely to have weighed on the company’s margins in the quarter to be reported. Higher selling, general and administrative expenses due to increased incentive compensation and elevated R&D expenses to support the company’s growth strategy and new product development may have negatively impacted the first-quarter margins.
Savings from Caterpillar’s ongoing cost control measures and restructuring actions might have negated some of these headwinds. This may get reflected in the company’s margins in the quarter to be reported.
Segment Expectations
For the Machinery, Energy & Transportation segment, which generates around 90% of the company’s total revenues, the Zacks Consensus Estimate for first-quarter 2022 revenues is pegged at $12.9 billion, suggesting an improvement of 15% from the prior-year quarter. The consensus mark for operating profit for the segment stands at $1,717 million, suggesting a year-over-year improvement of 3% from the prior-year quarter.
The Zacks Consensus Estimate for the Resource Industries segment’s first-quarter external sales stands at $2,589 million, reflecting year-over-year growth of 23%. Higher metal prices throughout the quarter might have translated into improved mining orders for the company across all regions. Improvement in heavy construction and quarry and aggregates, particularly in North America and the EAME, might have contributed to the segment’s performance. The segment is anticipated to report an operating profit of $353 million, suggesting growth of 8% from the year-ago quarter.
The consensus mark for the Construction segment’s external sales stands at $6,114 million, indicating growth of 12% from the year-ago quarter. In North America, demand from both residential and non-residential construction is likely to have aided the segment’s performance in the quarter to be reported.
Increased construction activity may have supported machine demand in EAME and Latin America as well. However, lower construction demand in China and the impact of lockdowns in the country due to coronavirus outbreak are likely to have led to lower sales growth in the Asia Pacific. The Zacks Consensus Estimate for the Construction segment’s operating profit stands at $1,036 million, flat compared with the prior-year quarter.
For the Energy & Transportation segment, the consensus mark for external sales stands at $4,224 million, indicating growth of 15% from the prior-year reported figure. Both Industrial and Oil & Gas are expected to have witnessed growth on strong demand. Improvement in power generation supported by data center activity, and rising sales in transportation, courtesy of an increase in rail services and international businesses, may have contributed to sales in the quarter to be reported. The Zacks Consensus Estimate for the Energy & Transportation segment’s operating profit is pegged at $685 million, suggesting a 3% increase from the year-ago reported figure.
What Our Model Unveils
Our proven model does not conclusively predict an earnings beat for Caterpillar this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, but that is not the case here.
You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Earnings ESP: Caterpillar has an Earnings ESP of -4.61%.
Shares of the company have fallen 6.2% in the past year, compared with the industry’s decline of 8%.
Stocks Poised to Beat Earnings
Here are some Industrial Products stocks, which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:
Eaton Corporation (ETN - Free Report) has an Earnings ESP of +0.85% and a Zacks Rank #3. The Zacks Consensus Estimate for the company’s revenues of $4.81 billion for the first quarter of 2022 indicates year-over-year growth of 2.6%.
The Zacks Consensus Estimate for the company’s earnings for the first quarter of 2022 currently stands at $1.60, suggesting year-over-year growth of 11%. ETN’s earnings topped the consensus mark in each of the trailing four quarters, the average surprise being 7%.
Mueller Water Products (MWA - Free Report) has an Earnings ESP of +3.45% and a Zacks Rank #3. The Zacks Consensus Estimate for the company’s revenues of $294.5 million for the first quarter of 2022 indicates year-over-year growth of 10%.
The consensus mark for Mueller Water’s earnings for the quarter under review is pegged at 15 cents, implying 7% growth from the prior-year quarter. The company beat estimates in three of the trailing four quarters and missed once, the average surprise being 11.5%.
John Bean Technologies Corporation (JBT - Free Report) currently has an Earnings ESP of +3.57% and a Zacks Rank of 3. The Zacks Consensus Estimate for JBT’s quarterly revenues is pegged at $441 million, which indicates an increase of 5.5% from the prior-year quarter’s levels.
The Zacks Consensus Estimate for John Bean’s first-quarter 2022 earnings has been stable in the past 30 days at 56 cents per share, suggesting year-over-year decline of 37.8%. JBT has a trailing four-quarter earnings surprise of 0.93%, on average.
Image: Bigstock
Caterpillar (CAT) to Report Q1 Earnings: What's in Store?
Caterpillar Inc. (CAT - Free Report) is likely to register a decline in its bottom line, due to inflated costs and supply chain disruptions despite higher revenues on the back of strong demand, when it reports first-quarter 2022 results on Apr 28, before the opening bell. The Zacks Consensus Estimate for quarterly earnings per share for the quarter is currently pegged at $2.66, which indicates a 7% decline from the year-ago reported figure. The consensus mark for total sales stands at $13.5 billion, suggesting growth of 13.6% from the prior-year quarter.
Q4 Results & Surprise History
In the last reported quarter, Caterpillar delivered improved year-over-year performance in both its top and bottom lines, driven by higher demand in end markets and strong operational performance. Both sales and earnings beat the respective Zacks Consensus Estimate.
With the earnings beat in the last quarter, the mining and construction equipment behemoth maintained the streak of surpassing earnings estimates for seven consecutive quarters. CAT has a trailing four-quarter earnings surprise of 24.07%, on average.
Caterpillar Inc. Price and EPS Surprise
Caterpillar Inc. price-eps-surprise | Caterpillar Inc. Quote
Factors to Note
The ongoing expansion in manufacturing activity has been reflecting on Caterpillar’s order book over the past few quarters. For the first quarter of 2022, total industrial production rose at an annual rate of 8.1%. Manufacturing output increased at an annual rate of 5.4%. These figures indicate that Caterpillar might have witnessed strong order levels over the course of the first quarter. This, along with the solid backlog of $23 billion reported at the end of the fourth quarter of 2021, may get reflected in Caterpillar’s first-quarter 2022 top line.
Supply chain headwinds, labor constraints currently faced by the industry, and inflated costs for raw materials and freight services are likely to have weighed on the company’s margins in the quarter to be reported. Higher selling, general and administrative expenses due to increased incentive compensation and elevated R&D expenses to support the company’s growth strategy and new product development may have negatively impacted the first-quarter margins.
Savings from Caterpillar’s ongoing cost control measures and restructuring actions might have negated some of these headwinds. This may get reflected in the company’s margins in the quarter to be reported.
Segment Expectations
For the Machinery, Energy & Transportation segment, which generates around 90% of the company’s total revenues, the Zacks Consensus Estimate for first-quarter 2022 revenues is pegged at $12.9 billion, suggesting an improvement of 15% from the prior-year quarter. The consensus mark for operating profit for the segment stands at $1,717 million, suggesting a year-over-year improvement of 3% from the prior-year quarter.
The Zacks Consensus Estimate for the Resource Industries segment’s first-quarter external sales stands at $2,589 million, reflecting year-over-year growth of 23%. Higher metal prices throughout the quarter might have translated into improved mining orders for the company across all regions. Improvement in heavy construction and quarry and aggregates, particularly in North America and the EAME, might have contributed to the segment’s performance. The segment is anticipated to report an operating profit of $353 million, suggesting growth of 8% from the year-ago quarter.
The consensus mark for the Construction segment’s external sales stands at $6,114 million, indicating growth of 12% from the year-ago quarter. In North America, demand from both residential and non-residential construction is likely to have aided the segment’s performance in the quarter to be reported.
Increased construction activity may have supported machine demand in EAME and Latin America as well. However, lower construction demand in China and the impact of lockdowns in the country due to coronavirus outbreak are likely to have led to lower sales growth in the Asia Pacific. The Zacks Consensus Estimate for the Construction segment’s operating profit stands at $1,036 million, flat compared with the prior-year quarter.
For the Energy & Transportation segment, the consensus mark for external sales stands at $4,224 million, indicating growth of 15% from the prior-year reported figure. Both Industrial and Oil & Gas are expected to have witnessed growth on strong demand. Improvement in power generation supported by data center activity, and rising sales in transportation, courtesy of an increase in rail services and international businesses, may have contributed to sales in the quarter to be reported. The Zacks Consensus Estimate for the Energy & Transportation segment’s operating profit is pegged at $685 million, suggesting a 3% increase from the year-ago reported figure.
What Our Model Unveils
Our proven model does not conclusively predict an earnings beat for Caterpillar this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, but that is not the case here.
You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Earnings ESP: Caterpillar has an Earnings ESP of -4.61%.
Zacks Rank: It currently carries a Zacks Rank #3.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Price Performance
Image Source: Zacks Investment Research
Shares of the company have fallen 6.2% in the past year, compared with the industry’s decline of 8%.
Stocks Poised to Beat Earnings
Here are some Industrial Products stocks, which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:
Eaton Corporation (ETN - Free Report) has an Earnings ESP of +0.85% and a Zacks Rank #3. The Zacks Consensus Estimate for the company’s revenues of $4.81 billion for the first quarter of 2022 indicates year-over-year growth of 2.6%.
The Zacks Consensus Estimate for the company’s earnings for the first quarter of 2022 currently stands at $1.60, suggesting year-over-year growth of 11%. ETN’s earnings topped the consensus mark in each of the trailing four quarters, the average surprise being 7%.
Mueller Water Products (MWA - Free Report) has an Earnings ESP of +3.45% and a Zacks Rank #3. The Zacks Consensus Estimate for the company’s revenues of $294.5 million for the first quarter of 2022 indicates year-over-year growth of 10%.
The consensus mark for Mueller Water’s earnings for the quarter under review is pegged at 15 cents, implying 7% growth from the prior-year quarter. The company beat estimates in three of the trailing four quarters and missed once, the average surprise being 11.5%.
John Bean Technologies Corporation (JBT - Free Report) currently has an Earnings ESP of +3.57% and a Zacks Rank of 3. The Zacks Consensus Estimate for JBT’s quarterly revenues is pegged at $441 million, which indicates an increase of 5.5% from the prior-year quarter’s levels.
The Zacks Consensus Estimate for John Bean’s first-quarter 2022 earnings has been stable in the past 30 days at 56 cents per share, suggesting year-over-year decline of 37.8%. JBT has a trailing four-quarter earnings surprise of 0.93%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.