View the full cat chart at Wikinvest

Cat Stock Blog

Caterpillar Inc. (NYSE:CAT) stock news and links


Caterpillar Q4/08 earnings preview

Caterpillar announces earnings before the opening bell Monday morning. The hot money doesn’t care what happened last year: it wants to know what’s coming. The lesson of CNH last week was harrowing: 2008 was on balance a pretty good year, but lack of guidance on 2009 got the company’s shares crushed by over a third in one day. I can’t imagine Cat getting hit that hard because there’s too much bullish sentiment on the company’s long-term prospects, but there should be some excitement.

The low-down
Cat’s fourth-quarter earnings for 2008 are expected to fall between $1.03 and $1.42 per share on revenue between $11.75 billion and 13.41. (Source: SeekingAlpha).

Caterpillar sees FY08 EPS of about $6.00 vs. consensus $5.89, and FY08 revenue topping $50B vs. consensus $51.25B. The company also stated FY09 economic outlook is “extremely uncertain.” The company believes its current outlook for 2009 calls for sales and revenues to be about flat with its FY08 results.

Money quote from this Associated Press report at

“It’s not going to be a pretty quarter, and the guidance is likely to be ugly,” said Longbow Research analyst Eli Lustgarten. “You’re talking about a pretty substantial double-digit decline in 2009.”

Cat’s results will be announced at 6:30 a.m. Monday CST. The conference call is at 10 a.m. CST; go here for the Web cast (leave yourself 15 minutes for software installation and registration). Or you can dial in at 877-216-8554 (U.S.) or 973-528-0009 (international). Entry code: 5621. Go here if you missed the call and want to hear a replay.

What to listen for:

  • Access to financing: Buyers pay cash for a large chunk of Cat’s order book (up to half in some construction-machinery categories, as I recall) , but the rest must borrow. With credit crunch fears returning in the past couple weeks, this’ll be first on the market’s mind.
  • Order backlog: Cat had a nice order backlog last year, particularly on huge off-highway mining trucks (one of the key rationales for the North Little Rock plant was to make room in Decatur to build more off-highway trucks). How many cancellations is Cat getting?
  • Exchange rates: Cat adores cheap steel and non-union wages, but above all it craves a cheap dollar. What’s Cat’s currency outlook?
  • Commodities: Cheap steel would be good for Cat, obviously, but low prices for everything else — minerals, crops, oil — hurt demand for Cat equipment, and demand for steel, so low steel prices are probably more bearish than bullish for Cat.
  • Labor: Does Caterpillar expect to fire people this year? What’s the company’s outlook on health care expenditures and pension funding?
  • Infrastructure: How much does Caterpillar, which appears in a far better position to know, expect to benefit from “rescue” plans in the U.S. and China?
  • Green energy: I know it’s kind of a buzzword and possibly the next big bubble, but so-called “alternative” energy will require machinery to implement. How does Cat plan to surf this wave?

Earnings announcements are flooding the markets next week. Here’s a look at what’s coming.

I may still be asleep when Cat’s numbers go public (4:30 a.m. PST!), but I do plan to listen in on the conference call and report back here. Should be some fun. Remember: one-day moves are irrelevant in the grand scheme of things.

I’m reminded of the Chinese curse: “May you live in interesting times.”

one comment | Permalink | Tags:
Tom Mangan posted at 8:49 am January 24th, 2009 |

One Response to 'Caterpillar Q4/08 earnings preview'

Subscribe to comments with RSS or TrackBack to 'Caterpillar Q4/08 earnings preview'.

  1. Caterpillar Inc. earnings: Wonderful 2008; woeful 2009 | Cat Stock Blog says:

    […] other day I posted a list of bullet points to look for in this morning’s earnings release. Let’s […]

    Permalink | Posted January 26th, 2009, at 7:12 am

Leave a Reply