Caterpillar Inc. smashes earnings expectations. Shares are dropped today for 2%

Sive Morten

Special Consultant to the FPA
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Caterpillar Inc. releases earning report today that beats expectations, market jumps on pre-market today for ~3%, but warned supply-chain bottlenecks, particularly a global shortage of semiconductor chips, could affect its ability to keep up with increasing customer orders.

Company shares have outperformed the Dow Jones Industrial Average with a gain of 27% since its last earnings report, later in the session are down 2% at $227.41.

Despite that report is positive and smashed expectations, mostly numbers were expected and priced-in in current CAT’s price, as company shares performance already stands significantly better than blue-cheap DJIA Index and off a good start in IQ of 2021.

Another reason of shares fall is Company didn’t tell analysts what to anticipate as Illinois-based manufacturer of heavy machinery did not provide an earnings forecast for this year. The lack of guidance meant the Wall Street wasn’t upbeat enough in projecting the impact of restocking on the first-quarter results.


Chief Financial Officer Andrew Bonfield said in the Reuters interview that while the company was seeing a recovery in most of its markets around the world, the supply situation related to chips remained "dynamic and very fluid" and could impact production later this year.

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Caterpillar Inc. (NYSE: CAT) today announced first-quarter 2021 sales and revenues of $11.9 billion, a 12% increase compared with $10.6 billion in the first quarter of 2020. The increase was due to higher sales volume driven by higher end-user demand and the impact from changes in dealer inventories.

Operating profit margin was 15.3% for the first quarter of 2021, compared with 13.2% for the first quarter of 2020.

Adjusted profit per share in the first quarter of 2021 was $2.87, compared with first-quarter 2020 adjusted profit per share of $1.65. Analysts surveyed by Refinitiv, on average, expected earnings of $1.94 per share. It means that earnings exceeded estimates by almost 50%. Company’s sales were about 13% higher than expected, one of the company’s biggest sales “beats” of the past decade.

For the three months ended March 31, 2021, enterprise operating cash flow was $1.9 billion. Caterpillar ended the first quarter with $11.3 billion of enterprise cash.

“I’m proud of our global team’s strong performance as they continue to serve our customers,” said Caterpillar Chairman and CEO Jim Umpleby. “We’re encouraged by improving conditions in our end markets and are proactively managing supply chain risks. Our dedicated team continues to execute our strategy for long-term profitable growth.”

With 2020 sales and revenues of $41.7 billion, Caterpillar Inc. is the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. Company makes business on every continent, principally operating through three primary segments – Construction Industries, Resource Industries, and Energy & Transportation – and providing financing and related services through our Financial Products segment.
 
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