November 28, 2020

Caterpillar Profit Rises 44% but Misses Wall St. Estimates

Continued robust demand for Caterpillar’s heavy equipment raised the company’s second-quarter profit 44 percent, the company said Friday, but higher costs and cautious comments about China’s economy set off a 5.8 percent decline in its share price.

The company raised its sales outlook for the year, but cost increases, mostly related to its recent acquisition of the mining equipment maker Bucyrus, will prevent rising sales from helping profit more than previously expected.

Caterpillar’s quarterly profit fell short of Wall Street estimates for the first time since the recession ended.

Many investors that were very optimistic about Caterpillar appeared to pause and reassess the prospects for months ahead, said Jeff Windau, an analyst at Edward Jones, who thinks Caterpillar still has strong long-term growth potential.

“There’s a lot to digest in this quarter,” Mr. Windau said.

The company said it earned $1.02 billion, or $1.52 a share, up from $707 million, or $1.09 a share, a year earlier.

Excluding costs associated with the Bucyrus acquisition, profit per share would have been $1.72.

Revenue rose 37 percent to $14.2 billion, easily topping Wall Street estimates.

Caterpillar predicts 2011 sales of $56 billion to $58 billion with Bucyrus. Previously, it predicted sales of $52 billion to $54 billion.

Stock in Caterpillar, which is based in Peoria, Ill., fell $6.45 to close at $105.15 a share.

Article source: http://feeds.nytimes.com/click.phdo?i=da729b49b7429fc044387757f86d0ae4

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