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Caterpillar (CAT) to Post Q3 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 third-quarter 2022 results on Oct 27, before the opening bell. Strong demand in its end markets and pricing actions are expected to have negated the impact of inflated costs and supply chain disruptions, driving the improvement in the quarterly results.
The Zacks Consensus Estimate for quarterly earnings per share for the quarter is currently pegged at $3.20, which indicates growth of 20% from the year-ago reported figure. The consensus mark for total sales stands at $14.2 billion, suggesting growth of 14.9% from the prior-year quarter.
Q2 Results & Surprise History
In the last reported quarter, Caterpillar delivered improved year-over-year performance in its revenues and earnings. While revenues missed the Zacks Consensus Estimate, earnings surpassed the same.
With the earnings beat in the last quarter, the mining and construction equipment behemoth maintained the streak of surpassing earnings estimates for nine consecutive quarters. CAT has a trailing four-quarter earnings surprise of 13.15%, on average.
The expansion in manufacturing activity has translated into higher order levels for Caterpillar over the past few quarters. For the third quarter of 2022, total industrial production rose at an annual rate of 2.9%. Manufacturing output increased at an annual rate of 1.9%. These figures indicate that Caterpillar might have witnessed an increase in order levels inthe quarter. This, along with the solid backlog of $28.4 billion reported at the end of the second quarter of 2022, may get reflected in Caterpillar’s third-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
The Zacks Consensus Estimate for the Resource Industries segment’s third-quarter external sales stands at $2,819 million, reflecting year-over-year growth of 23% on higher end-user demand for equipment and aftermarket parts as well as favorable price realization. Improvement in heavy construction, 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 $400 million, suggesting growth of 35% from the year-ago quarter.
The consensus mark for the Construction segment’s external sales stands at $5,865 million, indicating growth of 11% 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 is expected to have driven machine demand in EAME and Latin America as well. Lower construction demand in China due to the impact of lockdowns is likely to have been offset by higher demand in other regions of Asia Pacific. The Zacks Consensus Estimate for the Construction segment’s operating profit stands at $1,043 million, indicating growth of 21% from the prior-year quarter.
For the Energy & Transportation segment, the consensus mark for external sales stands at $4,860 million, suggesting an improvement of 17% from the prior-year reported figure aided by higher sales across all regions. 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 $810 million, suggesting a 10% improvement 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: The company currently carries a Zacks Rank #3.
Shares of the company have fallen 10.7% in the past year, compared with the industry’s decline of 10.5%.
Stocks Poised to Beat Earnings Estimates
Here are some Industrial Products stocks, which, according to our model, have the right combination of elements to post an earnings beat in their upcoming releases:
The Timken Company (TKR - Free Report) currently has an Earnings ESP of +2.41% and a Zacks Rank of 2. The Zacks Consensus Estimate for third-quarter 2022 earnings has moved up 2% in the past 60 days to $1.33 per share. The estimate suggests growth of 12.7% from the year-ago reported figure. TKR has a trailing four-quarter earnings surprise of 11.7%, on average.
The Zacks Consensus Estimate for TKR’s quarterly revenues is pegged at $1.09 billion, indicating an increase of 5% from the prior-year quarter’s levels.
Mueller Water Products (MWA - Free Report) currently has an Earnings ESP of +17.65% and a Zacks Rank of 3. The Zacks Consensus Estimate for third-quarter 2022 earnings is currently pegged at 14 cents per share, suggesting 16.7% growth from the year-ago quarter. The estimate has gone up 8% over the past 60 days.
The Zacks Consensus Estimate for quarterly revenues is pinned at $320.7 million, suggesting growth of 8.5% from the prior-year tally. MWA has a trailing four-quarter earnings surprise of 5.17%, on average.
O-I Glass Inc. (OI - Free Report) currently has an Earnings ESP of +2.20% and a Zacks Rank #2. The Zacks Consensus Estimate for third-quarter 2022 earnings has gone up 3% in the past 60 days and is currently pegged at 61 cents per share. The projection indicates 5.2% growth from the year-ago reported figure.
The Zacks Consensus Estimate for OI’s quarterly revenues is pegged at $1.71 billion, which indicates an improvement of 6.27% from the year-ago reported figure. OI has a trailing four-quarter earnings surprise of 17.4%, on average.
Image: Bigstock
Caterpillar (CAT) to Post Q3 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 third-quarter 2022 results on Oct 27, before the opening bell. Strong demand in its end markets and pricing actions are expected to have negated the impact of inflated costs and supply chain disruptions, driving the improvement in the quarterly results.
The Zacks Consensus Estimate for quarterly earnings per share for the quarter is currently pegged at $3.20, which indicates growth of 20% from the year-ago reported figure. The consensus mark for total sales stands at $14.2 billion, suggesting growth of 14.9% from the prior-year quarter.
Q2 Results & Surprise History
In the last reported quarter, Caterpillar delivered improved year-over-year performance in its revenues and earnings. While revenues missed the Zacks Consensus Estimate, earnings surpassed the same.
With the earnings beat in the last quarter, the mining and construction equipment behemoth maintained the streak of surpassing earnings estimates for nine consecutive quarters. CAT has a trailing four-quarter earnings surprise of 13.15%, on average.
Caterpillar Inc. Price and EPS Surprise
Caterpillar Inc. price-eps-surprise | Caterpillar Inc. Quote
Factors to Note
The expansion in manufacturing activity has translated into higher order levels for Caterpillar over the past few quarters. For the third quarter of 2022, total industrial production rose at an annual rate of 2.9%. Manufacturing output increased at an annual rate of 1.9%. These figures indicate that Caterpillar might have witnessed an increase in order levels inthe quarter. This, along with the solid backlog of $28.4 billion reported at the end of the second quarter of 2022, may get reflected in Caterpillar’s third-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
The Zacks Consensus Estimate for the Resource Industries segment’s third-quarter external sales stands at $2,819 million, reflecting year-over-year growth of 23% on higher end-user demand for equipment and aftermarket parts as well as favorable price realization. Improvement in heavy construction, 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 $400 million, suggesting growth of 35% from the year-ago quarter.
The consensus mark for the Construction segment’s external sales stands at $5,865 million, indicating growth of 11% 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 is expected to have driven machine demand in EAME and Latin America as well. Lower construction demand in China due to the impact of lockdowns is likely to have been offset by higher demand in other regions of Asia Pacific. The Zacks Consensus Estimate for the Construction segment’s operating profit stands at $1,043 million, indicating growth of 21% from the prior-year quarter.
For the Energy & Transportation segment, the consensus mark for external sales stands at $4,860 million, suggesting an improvement of 17% from the prior-year reported figure aided by higher sales across all regions. 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 $810 million, suggesting a 10% improvement 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: The company 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 10.7% in the past year, compared with the industry’s decline of 10.5%.
Stocks Poised to Beat Earnings Estimates
Here are some Industrial Products stocks, which, according to our model, have the right combination of elements to post an earnings beat in their upcoming releases:
The Timken Company (TKR - Free Report) currently has an Earnings ESP of +2.41% and a Zacks Rank of 2. The Zacks Consensus Estimate for third-quarter 2022 earnings has moved up 2% in the past 60 days to $1.33 per share. The estimate suggests growth of 12.7% from the year-ago reported figure. TKR has a trailing four-quarter earnings surprise of 11.7%, on average.
The Zacks Consensus Estimate for TKR’s quarterly revenues is pegged at $1.09 billion, indicating an increase of 5% from the prior-year quarter’s levels.
Mueller Water Products (MWA - Free Report) currently has an Earnings ESP of +17.65% and a Zacks Rank of 3. The Zacks Consensus Estimate for third-quarter 2022 earnings is currently pegged at 14 cents per share, suggesting 16.7% growth from the year-ago quarter. The estimate has gone up 8% over the past 60 days.
The Zacks Consensus Estimate for quarterly revenues is pinned at $320.7 million, suggesting growth of 8.5% from the prior-year tally. MWA has a trailing four-quarter earnings surprise of 5.17%, on average.
O-I Glass Inc. (OI - Free Report) currently has an Earnings ESP of +2.20% and a Zacks Rank #2. The Zacks Consensus Estimate for third-quarter 2022 earnings has gone up 3% in the past 60 days and is currently pegged at 61 cents per share. The projection indicates 5.2% growth from the year-ago reported figure.
The Zacks Consensus Estimate for OI’s quarterly revenues is pegged at $1.71 billion, which indicates an improvement of 6.27% from the year-ago reported figure. OI has a trailing four-quarter earnings surprise of 17.4%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.