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Caterpillar (CAT) to Post Q2 Earnings: What's in the Offing?
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Caterpillar Inc. (CAT - Free Report) is likely to register an improvement in both top- and bottom lines when it reports second-quarter 2022 results on Aug 2, before the opening bell. Strong demand in its end markets and pricing actions that are expected to have negated the impact of inflated costs and supply chain disruptions are likely to have driven the to-be-reported quarter’s results. The Zacks Consensus Estimate for quarterly earnings per share for the quarter is currently pegged at $2.99, which indicates growth of 15% from the year-ago reported figure. The consensus mark for total sales stands at $14.3 billion, suggesting growth of 11% from the prior-year quarter.
Q1 Results & Surprise History
In the last reported quarter, Caterpillar delivered improved year-over-year performance in both its revenues and earnings and 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 eight consecutive quarters. CAT has a trailing four-quarter earnings surprise of 13.96%, on average.
The ongoing expansion in manufacturing activity has been reflected in Caterpillar’s order book over the past few quarters. For the second quarter of 2022, total industrial production rose at an annual rate of 6.1%. 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 quarter. This, along with the solid backlog of $26.4 billion reported at the end of the first quarter of 2022, may get reflected in Caterpillar’s second-quarter 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 might have aggravated the pressure on margins. Nevertheless, savings from Caterpillar’s cost control measures and restructuring actions are expected to have negated some of these headwinds and contributed to the company’s margins.
Segment Expectations
For the Machinery, Energy & Transportation segment, which generates around 90% of the company’s total revenues, the Zacks Consensus Estimate for second-quarter 2022 revenues is pegged at $13.8 billion, suggesting an improvement of 14% from the prior-year quarter. The consensus mark for operating profit for the segment stands at $1,903 million, suggesting a year-over-year improvement of 15% from the prior-year quarter.
The Zacks Consensus Estimate for the Resource Industries segment’s second-quarter external sales stands at $2,827 million, reflecting year-over-year growth of 14% on higher end-user demand for equipment and aftermarket parts and favorable price realization. Improvement in heavy construction and quarry and aggregates might have contributed to the segment’s performance. Sales are expected to be up across all regions. The segment is anticipated to report an operating profit of $429 million, suggesting growth of 19% from the year-ago quarter.
The consensus mark for the Construction segment’s external sales stands at $6,273 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 driven 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 the resurgence of the COVID-19 virus 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 $1,151 million, indicating growth of 12% from the prior-year quarter.
For the Energy & Transportation segment, the consensus mark for external sales stands at $4,665 million, suggesting an improvement of 13% from the prior-year reported figure. Both Industrial and Oil & Gas are expected to have witnessed growth in 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 $697 million, suggesting a 5% decline 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 -2.82%.
Shares of the company have fallen 12.4% in the past year, compared with the industry’s decline of 15.5%.
Stocks Poised to Beat Earnings Estimates
Here are some Industrial Product stocks that you may consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.
MRC Global Inc. (MRC - Free Report) currently has an Earnings ESP of +30.27% and a Zacks Rank of 1. The Zacks Consensus Estimate for first-quarter 2022 earnings has moved up 14% in the past 30 days to 25 cents per share, suggesting year-over-year growth of 213%. MRC has a trailing four-quarter earnings surprise of 140.8%, on average.
The Zacks Consensus Estimate for MRC’s quarterly revenues is pegged at $847 million, which indicates an increase of 23.4% from the prior-year quarter’s levels.
Eaton (ETN - Free Report) currently has an Earnings ESP of +0.04% and a Zacks Rank of 3. The Zacks Consensus Estimate for second-quarter 2022 earnings is currently pegged at $1.82 per share, suggesting a 5.8% increase from the last-year quarter.
The Zacks Consensus Estimate for quarterly revenues stands at $5.23 billion, indicating year-over-year growth of 0.2%. ETN has a trailing four-quarter earnings surprise of 3.5%, on average.
Mueller Water Products (MWA - Free Report) currently has an Earnings ESP of +2.50% and a Zacks Rank #3. The Zacks Consensus Estimate for second-quarter 2022 earnings has gone up in the past 30 days and is currently at 20 cents per share. The estimate suggests an 11% year-on-year growth.
The Zacks Consensus Estimate for Mueller Water quarterly revenues is pegged at $334.6 million, which indicates a year-over-year improvement of 7.8%. MWA has a trailing four-quarter earnings surprise of 9.5%, on average.
Image: Bigstock
Caterpillar (CAT) to Post Q2 Earnings: What's in the Offing?
Caterpillar Inc. (CAT - Free Report) is likely to register an improvement in both top- and bottom lines when it reports second-quarter 2022 results on Aug 2, before the opening bell. Strong demand in its end markets and pricing actions that are expected to have negated the impact of inflated costs and supply chain disruptions are likely to have driven the to-be-reported quarter’s results. The Zacks Consensus Estimate for quarterly earnings per share for the quarter is currently pegged at $2.99, which indicates growth of 15% from the year-ago reported figure. The consensus mark for total sales stands at $14.3 billion, suggesting growth of 11% from the prior-year quarter.
Q1 Results & Surprise History
In the last reported quarter, Caterpillar delivered improved year-over-year performance in both its revenues and earnings and 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 eight consecutive quarters. CAT has a trailing four-quarter earnings surprise of 13.96%, 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 reflected in Caterpillar’s order book over the past few quarters. For the second quarter of 2022, total industrial production rose at an annual rate of 6.1%. 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 quarter. This, along with the solid backlog of $26.4 billion reported at the end of the first quarter of 2022, may get reflected in Caterpillar’s second-quarter 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 might have aggravated the pressure on margins. Nevertheless, savings from Caterpillar’s cost control measures and restructuring actions are expected to have negated some of these headwinds and contributed to the company’s margins.
Segment Expectations
For the Machinery, Energy & Transportation segment, which generates around 90% of the company’s total revenues, the Zacks Consensus Estimate for second-quarter 2022 revenues is pegged at $13.8 billion, suggesting an improvement of 14% from the prior-year quarter. The consensus mark for operating profit for the segment stands at $1,903 million, suggesting a year-over-year improvement of 15% from the prior-year quarter.
The Zacks Consensus Estimate for the Resource Industries segment’s second-quarter external sales stands at $2,827 million, reflecting year-over-year growth of 14% on higher end-user demand for equipment and aftermarket parts and favorable price realization. Improvement in heavy construction and quarry and aggregates might have contributed to the segment’s performance. Sales are expected to be up across all regions. The segment is anticipated to report an operating profit of $429 million, suggesting growth of 19% from the year-ago quarter.
The consensus mark for the Construction segment’s external sales stands at $6,273 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 driven 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 the resurgence of the COVID-19 virus 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 $1,151 million, indicating growth of 12% from the prior-year quarter.
For the Energy & Transportation segment, the consensus mark for external sales stands at $4,665 million, suggesting an improvement of 13% from the prior-year reported figure. Both Industrial and Oil & Gas are expected to have witnessed growth in 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 $697 million, suggesting a 5% decline 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 -2.82%.
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 12.4% in the past year, compared with the industry’s decline of 15.5%.
Stocks Poised to Beat Earnings Estimates
Here are some Industrial Product stocks that you may consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.
MRC Global Inc. (MRC - Free Report) currently has an Earnings ESP of +30.27% and a Zacks Rank of 1. The Zacks Consensus Estimate for first-quarter 2022 earnings has moved up 14% in the past 30 days to 25 cents per share, suggesting year-over-year growth of 213%. MRC has a trailing four-quarter earnings surprise of 140.8%, on average.
The Zacks Consensus Estimate for MRC’s quarterly revenues is pegged at $847 million, which indicates an increase of 23.4% from the prior-year quarter’s levels.
Eaton (ETN - Free Report) currently has an Earnings ESP of +0.04% and a Zacks Rank of 3. The Zacks Consensus Estimate for second-quarter 2022 earnings is currently pegged at $1.82 per share, suggesting a 5.8% increase from the last-year quarter.
The Zacks Consensus Estimate for quarterly revenues stands at $5.23 billion, indicating year-over-year growth of 0.2%. ETN has a trailing four-quarter earnings surprise of 3.5%, on average.
Mueller Water Products (MWA - Free Report) currently has an Earnings ESP of +2.50% and a Zacks Rank #3. The Zacks Consensus Estimate for second-quarter 2022 earnings has gone up in the past 30 days and is currently at 20 cents per share. The estimate suggests an 11% year-on-year growth.
The Zacks Consensus Estimate for Mueller Water quarterly revenues is pegged at $334.6 million, which indicates a year-over-year improvement of 7.8%. MWA has a trailing four-quarter earnings surprise of 9.5%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.