Investing

What to Expect When These 2 Top Dow Members Report Tuesday

Chris Lange

Published: October 23, 2017 1:05 pm

Last Updated: January 12, 2020 6:55 am

After eclipsing the 23,000 mark earlier this month, the Dow Jones Industrial Average is already more than a third of the way to hitting 24,000. Most of the rally in 2017 has been reinforced by strong earnings, with the likes of IBM and UnitedHealth propelling the average higher last week. But now four of the top five Dow stocks are reporting this week, and with the run they have made so far this year, we might be seeing 24,000 a lot sooner than expected.

Coming Tuesday two of these top five are reporting, as McDonald’s Corp. (NYSE: MCD) and Caterpillar Inc. (NYSE: CAT) release earnings before the markets open. Caterpillar is second only to Boeing in terms of its performance, up about 42% year to date, while McDonald’s takes the fourth spot — behind Visa — up about 36%. Both companies are holding near their all-time highs. Keep on the lookout because results from Visa and Boeing are coming out on Wednesday.

McDonald’s

Consensus estimates from Thomson Reuters are calling for the Golden Arches to have $1.77 in earnings per share (EPS) and $5.74 billion in revenue. The same period of last year reportedly had EPS of $1.62 and $6.42 billion in revenue.

The stock started the year out around $120 and since then has seen steady growth with no real pullbacks. McDonald’s really started building momentum back in 2015 — after a few years of stagnation — when the company launched its all-day breakfast promotion.

Even in its most recent earnings report, McDonald’s saw incredible progress, with global comparable sales up over 6%. While the company may be doing better than it has in some time, one ongoing problem for McDonald’s is the perception of its customer service.

Shares of McDonald’s were last seen down about 1% at $164.38 on Monday, with a consensus analyst price target of $173.62 and a 52-week trading range of $110.83 to $167.90.

Caterpillar

Thomson Reuters has consensus estimates of $1.27 in EPS and revenue of $10.63 billion. In the third-quarter of last year, Caterpillar posted $0.85 in EPS and $9.16 billion in revenue.

Caterpillar in 2017 is a similar story to McDonald’s, having steadily grown over the course of the year with no major setbacks. The company really kicked into gear after it reported its first-quarter results back in April, winning the favor of quite a few analysts. This ultimately set up for an incredible summer for the stock.

Independent research firm Argus even thinks that it could be smooth sailing for Caterpillar for the next few quarters. The firm pointed out in a recent report:

The business is highly cyclical, and various commodity and currency trends are now finally beginning to turn in the company’s favor. Meanwhile, management has been aggressively cutting costs. In the most recent calls, management has highlighted some positive developments at its end markets. Moreover, on a macro basis, key commodity prices have begun to firm, which could lead to better results for the company for the next several quarters. Despite the recent share price advance from cycle lows, the shares appear to offer value, and we see strong growth ahead.

Shares of Caterpillar were recently trading at $131.87. The stock has a 52-week range of $80.33 to $132.34 and a consensus price target of $129.75.