Caterpillar Says Analysts Too Bullish Amid Weak Construction

Caterpillar Says Analysts Too Bullish Amid Weak Construction (2)
2016-12-01 20:02:56.594 GMT

By Joe Richter and Joe Deaux
(Bloomberg) — Caterpillar Inc. said analysts are
overestimating its earnings prospects amid weakness in the North
American construction market and volatile energy prices that
aren’t high enough to drive substantial investment.
“In our view, $3.25 on $38 billion of sales and revenues is
too optimistic considering expected headwinds,” the Peoria,
Illinois-based company said in a presentation Thursday, citing
Thomson First Call estimates for 2017.
In October, the biggest maker of construction and mining
machinery lowered its revenue forecast for this year and said
next year won’t be much different as companies defer purchases
amid sluggish growth. While Caterpillar shares have surged 41
percent this year on bets its cost-cutting efforts will reap
rewards as demand recovers, commodity producers battered by a
five-year downturn are still putting off orders even as prices
recover.
According to estimates compiled by Bloomberg, sales next
year will be $38.3 billion and earnings excluding items will be
$3.35 a share. Caterpillar said today that $38 billion is a
“reasonable” midpoint expectation for sales.
In late October, the company said it expected 2017 revenue
wouldn’t be “significantly different” than in 2016. At the time,
it said its full-year outlook for 2016 revenue was about $39
billion, and profit would be $3.25 a share excluding
restructuring costs.
Caterpillar shares were halted before the presentation,
which was delivered at a Credit Suisse conference in Palm Beach,
Florida. They pared gains when trading resumed and were up 0.6
percent to $96.17 at 3:01 p.m. in New York.