What to Expect From Caterpillar Earnings

Looking ahead to the fourth quarter, the consensus estimates are for $1.61 in earnings per share and revenue of $14.27 billion. The fourth quarter from the previous year saw earnings of $1.58 per share and $14.40 billion in revenue.

Lower oil prices have played a role in estimates changing, but in some ways this could be mixed for Caterpillar. We have seen several analyst calls in Caterpillar of late:

• Deutsche Bank reiterated a Buy rating for Caterpillar, but lowered its price target to $112 from $122, on October 20.
• Credit Suisse reiterated an Outperform rating for Caterpillar, but lowered its price target to $108 from $119, on October 15.
• Barclays reiterated an Overweight rating for Caterpillar, but lowered its price target to $112 from $117, on October 13.

What are the charts saying? The 50-day moving average read at $101.35 and may act as an overhang from its crossover in mid-September. The 200-day moving average appears to be acting as an overhang as well, from when it crossed over in late-September. It currently reads at $100.19.

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What about options trading? Unfortunately, traders are not aggressively active in options for Caterpillar. The speculative puts and calls are skewed toward the call options for the closest strike prices in October expiration, a sign that generally implies a bullish view. Still, there was a larger bet made down in the $85 puts and in the $95 puts ahead of earnings. This might skew the outlook calculations, but a review of the closest speculative puts and calls indicates that options traders are braced for a move of up to about $2.25 in either direction.

Shares of Caterpillar have fallen roughly 8% over the course of the quarter to its close of $98.28 from its open of $107.17. The range on the third quarter was $98.26 to $111.46.

Caterpillar’s stock was trading down about 1% at $94.85, with three hours left in regular trading ahead of the formal earnings report. The stock has a consensus analyst price target of $107.43 and a 52-week range of $81.87 to $111.46. Caterpillar has a market cap of almost $60 billion.