Should Caterpillar Get More Credit for Its Q1 Report?

Industrials

Published: April 24, 2019 8:50 am

Last Updated: January 30, 2020 9:42 pm

Caterpillar Inc. (NYSE: CAT) released its first-quarter financial results before the markets opened on Wednesday. The company said that it had $2.94 in earnings per share (EPS) and $13.47 billion in revenue, which compares with consensus estimates of $2.86 in EPS and $13.46 billion in revenue, as well as the $2.82 per share and $12.86 billion posted in the same period of last year.

Overall, first-quarter sales and revenues increased 5% year over year, while the profit of $3.25 per share was a first-quarter record. This was a 19% increase compared with the previous record first-quarter profit per share of $2.74 in 2018. Note that the profit per share was not adjusted for taxes.

The revenue increase was primarily due to higher sales volume, driven by improved demand for both equipment and services, with the most significant increase in Resource Industries. Sales volume also increased in Construction Industries, while Energy & Transportation was about flat. Sales grew in all regions except for EAME, with the largest gains in North America and Asia/Pacific.

In terms of its segments, Caterpillar reported as follows:

Construction Industries revenues increased 3% year over year to $5.87 billion.
Resource Industries revenues increased by 18% to $2.73 billion.
Energy & Transportation revenues remained flat at $5.21 billion.

Looking ahead to the 2019 full year, the company expects to see profit per share in the range of $12.06 to $13.06, compared with the previous outlook range of $11.75 to $12.75. Consensus estimates are calling for $12.30 in EPS and $56.75 billion in revenue for the year.

Jim Umpleby, Caterpillar’s board chair and chief executive, commented:

The global Caterpillar team delivered record first-quarter profit per share. We are executing our strategy for profitable growth by investing in services, expanding our offerings and improving operational excellence.

Shares of Caterpillar closed Tuesday at $142.03, in a 52-week range of $112.06 to $161.60. The consensus price target is $143.09. Following the announcement, the stock was down over 2% at $138.40 in early trading indications Wednesday.

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