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Caterpillar (CAT) Q2 Earnings: A Surprise in the Cards?
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The earnings release of Caterpillar, Inc. (CAT - Free Report) , which is slated to be announced before the opening bell on Jul 26, is a much-awaited event as the world's largest manufacturer of construction and mining equipment is often considered an economic bellwether. Caterpillar’s results for the past few quarters have reflected a weak mining industry, low oil prices, a stronger U.S. dollar and China's economic woes. Notably, the company’s adjusted earnings plunged 68% to 67 cents per share in the last quarter.
Earnings Whispers
Our proven model shows that Caterpillar is likely to beat earnings in the to-be-reported quarter because it has the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold), which have a significantly higher chance of beating earnings.
Zacks ESP: Caterpillar’s Earnings ESP is +2.08% as the Most Accurate estimate of 98 cents is higher than the Zacks Consensus Estimate of 96 cents. A positive ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Caterpillar carries a Zacks Rank #3 (Hold). The combination of the company’s favorable Zacks Rank with a positive ESP makes us confident of an earnings beat.
Notably, the Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Surprise History
In the last quarter, Caterpillar’s earnings came in line with the Zacks Consensus Estimate. Going by the earnings surprise history, Caterpillar beat estimates in three of the last four quarters with a positive average surprise of 2.21%.
Caterpillar’s perked up restructuring actions will lead to significant cost savings. Another ray of hope for the company is that construction-related activity is picking up. The Architecture Billings Index, which is considered a leading indicator of U.S. non-residential construction, has remained above 50 in the recent months, signaling robust conditions ahead for the construction industry. Improvement in the construction sector will help to partially offset the impact of the weak mining sector.
However, Caterpillar’s sales continue to bear the brunt of a weak mining demand. Moreover, due to the consistent weakness in agriculture, sales of industrial engines will be affected. Persistent economic weakness in China and Brazil also adds to the company’s woes.
Some Promising Stocks
Caterpillar is not the only company looking up this earnings season. Here are some stocks in the industrial products sector that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Ball Corporation has an Earnings ESP of +1.01% and a Zacks Rank #3.
Dover Corporation (DOV - Free Report) has an Earnings ESP of +1.16% and a Zacks Rank #3.
Sealed Air Corporation (SEE - Free Report) has an Earnings ESP of +1.56% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
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Caterpillar (CAT) Q2 Earnings: A Surprise in the Cards?
The earnings release of Caterpillar, Inc. (CAT - Free Report) , which is slated to be announced before the opening bell on Jul 26, is a much-awaited event as the world's largest manufacturer of construction and mining equipment is often considered an economic bellwether. Caterpillar’s results for the past few quarters have reflected a weak mining industry, low oil prices, a stronger U.S. dollar and China's economic woes. Notably, the company’s adjusted earnings plunged 68% to 67 cents per share in the last quarter.
Earnings Whispers
Our proven model shows that Caterpillar is likely to beat earnings in the to-be-reported quarter because it has the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold), which have a significantly higher chance of beating earnings.
Zacks ESP: Caterpillar’s Earnings ESP is +2.08% as the Most Accurate estimate of 98 cents is higher than the Zacks Consensus Estimate of 96 cents. A positive ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Caterpillar carries a Zacks Rank #3 (Hold). The combination of the company’s favorable Zacks Rank with a positive ESP makes us confident of an earnings beat.
Notably, the Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Surprise History
In the last quarter, Caterpillar’s earnings came in line with the Zacks Consensus Estimate. Going by the earnings surprise history, Caterpillar beat estimates in three of the last four quarters with a positive average surprise of 2.21%.
CATERPILLAR INC Price and EPS Surprise
CATERPILLAR INC Price and EPS Surprise | CATERPILLAR INC Quote
What's Driving the Better-Than-Expected Earnings?
Caterpillar’s perked up restructuring actions will lead to significant cost savings. Another ray of hope for the company is that construction-related activity is picking up. The Architecture Billings Index, which is considered a leading indicator of U.S. non-residential construction, has remained above 50 in the recent months, signaling robust conditions ahead for the construction industry. Improvement in the construction sector will help to partially offset the impact of the weak mining sector.
However, Caterpillar’s sales continue to bear the brunt of a weak mining demand. Moreover, due to the consistent weakness in agriculture, sales of industrial engines will be affected. Persistent economic weakness in China and Brazil also adds to the company’s woes.
Some Promising Stocks
Caterpillar is not the only company looking up this earnings season. Here are some stocks in the industrial products sector that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Ball Corporation has an Earnings ESP of +1.01% and a Zacks Rank #3.
Dover Corporation (DOV - Free Report) has an Earnings ESP of +1.16% and a Zacks Rank #3.
Sealed Air Corporation (SEE - Free Report) has an Earnings ESP of +1.56% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>