Caterpillar Inc. (NYSE:CAT) shares closed 0.87% lower to $78.20 on Monday, possibly as traders booked profits ahead of the earnings release. The company has a market cap of $45.58 billion at 583.38 million shares outstanding. Shares have been trading in a 52-week range of $56.36 to $81.38 so the current price is closer to the resistance.
The company is set to print its Q2 earnings figures today and might show revenue of $10.06 billion and earnings per share of $0.96. Commodity prices have shown a recovery for the period, hence the estimated 5.8% increase in revenue, as indicated by the Bloomberg Commodity Index increase of 13% year-to-date.
However, the pickup in the energy industry might be lagging as it took a while for businesses to revamp operations and reinvest in mining activity after prices bottomed out around March. After all, energy and mining companies might be keen on waiting for more signs of an industry rebound before adjusting their cost structures and making equipment purchases from the likes of Caterpillar.
Of particular interest would also be the forward-looking statements for Caterpillar, especially since the oil market seems to be encountering roadblocks again recently. Crude oil is back to its April lows, reviving downbeat expectations for companies operating in the energy sector and related industries.
In the first quarter of 2016, revenue was down 25% year-over-year, dragged down by a 33% drop in Energy & Transportation, followed by a 19% slump in Construction. Keep in mind that the former sector represents nearly a third of the company’s overall revenue so another negative read could weigh heavily on the company’s outlook.
Caterpillar is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. operates through its three product segments: Resource Industries, Construction Industries, and Energy & Transportation, on top of providing financing through its Financial Products segment.
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