We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Caterpillar (CAT) Q3 Earnings & Sales Top Estimates, Rise Y/Y
Read MoreHide Full Article
Caterpillar Inc. (CAT - Free Report) reported third-quarter 2022 adjusted earnings per share of $3.95, which surpassed the Zacks Consensus Estimate of $3.19 by a solid margin of 24%. The bottom-line figure marked a 48.5% improvement year on year. Despite unfavorable manufacturing costs (mainly higher material and freight costs), strong demand across most end markets and favorable price realization led to the improvement in earnings in the quarter under review.
Including one-time items, Caterpillar’s earnings per share were $3.87, an improvement from the prior-year quarter’s $2.60.
Revenues Up On Higher Volumes & Price Realization
The company’s third-quarter revenues of around $15 billion beat the Zacks Consensus Estimate of $14.3 billion. The top line improved 21% from the year-ago quarter on favorable price realization and increased sales volumes.
Higher sales of equipment to end users as well as higher services and dealers adding to the inventories, led to the improvement in sales volumes. Unfavorable currency impacts related to the euro, Australian dollar and Japanese yen had a dampening effect. Sales increased across all segments as well as across all regions.
Higher Sales Offset Cost Impact on Margins
In the quarter under review, the cost of sales increased 18% year over year to around $10 billion. Manufacturing costs were higher in the quarter due to inflated material and freight costs as well as reflecting the impact of manufacturing inefficiencies. Gross profit improved 27% year over year to $4.8 billion aided by higher sales volumes. Gross margin was 32% in the quarter under review, up from 30.5% in the prior-year quarter.
Caterpillar Inc. Price, Consensus and EPS Surprise
Selling, general and administrative (SG&A) expenses increased 5% year over year to around $1.4 billion. Research and development (R&D) expenses climbed 11.5 to $476 million. Both SG&A and R&D expenses in the quarter were up year over year due to investments associated with the company's strategy for growth.
Operating profit in the quarter surged 46% year over year to $2.4 billion. Gains from increased volumes and favorable price realization helped offset the impact of inflated manufacturing costs as well as higher SG&A and R&D expenses.
The operating margin was 16.2% in the reported quarter, up from 13.4% in the prior-year quarter. Adjusted operating profit was $2,474 million in the quarter compared with $1,699 million in the last year’s quarter. Adjusted operating margin was 16.5% in the third quarter of 2022 versus 13.7% in the year-ago quarter.
Solid Segment Performances
Machinery and Energy & Transportation (ME&T) sales rose 22% year over year to $14.3 billion in the quarter under review. Construction Industries' sales were up 19% year over year to $6.3 billion on favorable price realization and higher volumes, somewhat offset by unfavorable currency impacts. Sales growth was witnessed across all regions, led by Latin America (51%), followed by North America with a 29% growth while EAME and Asia/Pacific both saw sales growth of 1%.
Sales at Resource Industries surged 30% year over year to around $3.1 billion on higher sales volume and improved price realization. Sales were up 66% in North America and 20% in Asia/Pacific. EAME and Latin America delivered growth of 15% and 13% respectively.
Sales of the Energy & Transportation segment in the quarter were around $6.2 billion, reflecting growth of 22% on higher sales volume and favorable price realization. The segment reported sales growth across all applications – Oil and Gas, Power Generation, Industrial and Transportation.
The ME&T segment reported an operating profit of $2,285 million, which reflected an improvement of 45% year over year. The Construction Industries segment witnessed a 40% surge in operating profit to $1,209 million. The Resource Industries segment’s operating profit soared 81% year over year to $506 million in the third quarter. The Energy & Transportation segment’s operating profit increased 32% year over year to $935 million.
Favorable price realization and elevated sales volume across all segments helped offset the impact of higher costs, resulting in the improvement in respective segments’ profits.
Financial Products’ total revenues climbed 7% to $819 million from the prior-year quarter due to higher average financing rates in North America and Latin America. The segment's profits were $220 million in the reported quarter, a 27% increase year on year, mainly due to a favorable impact from a lower provision for credit losses at Cat Financial, partially offset by mark-to-market adjustments on derivative contracts.
Cash Position
In the first nine-month period of 2022, Caterpillar’s operating cash flow was $5 billion compared with $5.8 billion in the prior-year period. The company returned $2 billion to shareholders through dividends and share repurchases throughout the quarter, ending with cash and equivalents of $6.3 billion.
Price Performance
Image Source: Zacks Investment Research
Over the past year, Caterpillar stock has gained 0.4%, compared with the industry’s decline of 1.4%.
Zacks Rank & Stocks to Consider
Caterpillar currently carries a Zacks Rank #3 (Hold).
Tenaris delivered a trailing four-quarter earnings surprise of 34%, on average. The Zacks Consensus Estimate for the company for 2022 indicates year-over-year growth of around 120%. The estimate has moved up 3% in the past 60 days. The TS stock has risen 38% in the past year.
Enerpac Tool delivered a four-quarter earnings surprise of 3.4%, on average. EPAC’s earnings estimates have increased 9% for fiscal 2023 (ending August 2023) in the past 60 days. The estimate indicates year-over-year growth of 44.6%. EPAC’s shares have gained 27.1% in the past year.
Reliance Steel & Aluminum’s earnings surprise in the last four quarters was 13.4%, on average. It has an expected earnings growth rate of 27.9% for fiscal 2022. The earnings estimates have moved up 0.1% over the past 60 days. The RS stock has gained 26% in the past year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Caterpillar (CAT) Q3 Earnings & Sales Top Estimates, Rise Y/Y
Caterpillar Inc. (CAT - Free Report) reported third-quarter 2022 adjusted earnings per share of $3.95, which surpassed the Zacks Consensus Estimate of $3.19 by a solid margin of 24%. The bottom-line figure marked a 48.5% improvement year on year. Despite unfavorable manufacturing costs (mainly higher material and freight costs), strong demand across most end markets and favorable price realization led to the improvement in earnings in the quarter under review.
Including one-time items, Caterpillar’s earnings per share were $3.87, an improvement from the prior-year quarter’s $2.60.
Revenues Up On Higher Volumes & Price Realization
The company’s third-quarter revenues of around $15 billion beat the Zacks Consensus Estimate of $14.3 billion. The top line improved 21% from the year-ago quarter on favorable price realization and increased sales volumes.
Higher sales of equipment to end users as well as higher services and dealers adding to the inventories, led to the improvement in sales volumes. Unfavorable currency impacts related to the euro, Australian dollar and Japanese yen had a dampening effect. Sales increased across all segments as well as across all regions.
Higher Sales Offset Cost Impact on Margins
In the quarter under review, the cost of sales increased 18% year over year to around $10 billion. Manufacturing costs were higher in the quarter due to inflated material and freight costs as well as reflecting the impact of manufacturing inefficiencies. Gross profit improved 27% year over year to $4.8 billion aided by higher sales volumes. Gross margin was 32% in the quarter under review, up from 30.5% in the prior-year quarter.
Caterpillar Inc. Price, Consensus and EPS Surprise
Caterpillar Inc. price-consensus-eps-surprise-chart | Caterpillar Inc. Quote
Selling, general and administrative (SG&A) expenses increased 5% year over year to around $1.4 billion. Research and development (R&D) expenses climbed 11.5 to $476 million. Both SG&A and R&D expenses in the quarter were up year over year due to investments associated with the company's strategy for growth.
Operating profit in the quarter surged 46% year over year to $2.4 billion. Gains from increased volumes and favorable price realization helped offset the impact of inflated manufacturing costs as well as higher SG&A and R&D expenses.
The operating margin was 16.2% in the reported quarter, up from 13.4% in the prior-year quarter. Adjusted operating profit was $2,474 million in the quarter compared with $1,699 million in the last year’s quarter. Adjusted operating margin was 16.5% in the third quarter of 2022 versus 13.7% in the year-ago quarter.
Solid Segment Performances
Machinery and Energy & Transportation (ME&T) sales rose 22% year over year to $14.3 billion in the quarter under review. Construction Industries' sales were up 19% year over year to $6.3 billion on favorable price realization and higher volumes, somewhat offset by unfavorable currency impacts. Sales growth was witnessed across all regions, led by Latin America (51%), followed by North America with a 29% growth while EAME and Asia/Pacific both saw sales growth of 1%.
Sales at Resource Industries surged 30% year over year to around $3.1 billion on higher sales volume and improved price realization. Sales were up 66% in North America and 20% in Asia/Pacific. EAME and Latin America delivered growth of 15% and 13% respectively.
Sales of the Energy & Transportation segment in the quarter were around $6.2 billion, reflecting growth of 22% on higher sales volume and favorable price realization. The segment reported sales growth across all applications – Oil and Gas, Power Generation, Industrial and Transportation.
The ME&T segment reported an operating profit of $2,285 million, which reflected an improvement of 45% year over year. The Construction Industries segment witnessed a 40% surge in operating profit to $1,209 million. The Resource Industries segment’s operating profit soared 81% year over year to $506 million in the third quarter. The Energy & Transportation segment’s operating profit increased 32% year over year to $935 million.
Favorable price realization and elevated sales volume across all segments helped offset the impact of higher costs, resulting in the improvement in respective segments’ profits.
Financial Products’ total revenues climbed 7% to $819 million from the prior-year quarter due to higher average financing rates in North America and Latin America. The segment's profits were $220 million in the reported quarter, a 27% increase year on year, mainly due to a favorable impact from a lower provision for credit losses at Cat Financial, partially offset by mark-to-market adjustments on derivative contracts.
Cash Position
In the first nine-month period of 2022, Caterpillar’s operating cash flow was $5 billion compared with $5.8 billion in the prior-year period. The company returned $2 billion to shareholders through dividends and share repurchases throughout the quarter, ending with cash and equivalents of $6.3 billion.
Price Performance
Image Source: Zacks Investment Research
Over the past year, Caterpillar stock has gained 0.4%, compared with the industry’s decline of 1.4%.
Zacks Rank & Stocks to Consider
Caterpillar currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Tenaris (TS - Free Report) , Enerpac Tool Group Corp. (EPAC - Free Report) and Reliance Steel & Aluminum Co. (RS - Free Report) . While TS and EPAC sport a Zacks Rank #1 (Strong Buy), RS carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
Tenaris delivered a trailing four-quarter earnings surprise of 34%, on average. The Zacks Consensus Estimate for the company for 2022 indicates year-over-year growth of around 120%. The estimate has moved up 3% in the past 60 days. The TS stock has risen 38% in the past year.
Enerpac Tool delivered a four-quarter earnings surprise of 3.4%, on average. EPAC’s earnings estimates have increased 9% for fiscal 2023 (ending August 2023) in the past 60 days. The estimate indicates year-over-year growth of 44.6%. EPAC’s shares have gained 27.1% in the past year.
Reliance Steel & Aluminum’s earnings surprise in the last four quarters was 13.4%, on average. It has an expected earnings growth rate of 27.9% for fiscal 2022. The earnings estimates have moved up 0.1% over the past 60 days. The RS stock has gained 26% in the past year.