Tuesday, July 21, 2009

Caterpillar...Typical Story

You have to wonder what spot in NYC the head dogs of all the firms meet to decide what will be the company / news item that everyone is going to pump to send the stock market soaring the next day.

What ever location was selected last night, the stock today was Caterpillar.

Typical story. Revenue miss, earnings beat.

Revenue expected by analysts were $8.7 billion with earnings of 19 cents. Caterpillar manages only $7.98 billion in revenue (that is a hefty 10% miss) but beat earnings expectations coming in at 60 cents a share.

For some comparison purposes revenue is down 41% from last year this quarter. Revenue came in at 13.62 billion last year for Q2 and earnings is down from $1.1 billion or $1.74 a share to $371 million or $.60 a share.

Okay, fair enough, maybe the stock is cheap?? Umm at $40 a share let's just annualize the $.60. That isn't being fair I realize but if you were to do that you would be paying 16.7X earnings. This for a very cyclical name.

In actuality for 2009 Caterpillar said it now expects 2009 profit of $1.15 to $2.25 a share excluding severance costs.

This is being touted as by Wall St. as raised guidance. It seems they just massively raised the range. Previously they had targeted $1.25. Now it is $1.15 (that is lower that $1.25 if my first grade math is still correct) to $2.25.

Hopefully we can all be fooled together.


The Duke said...

It will just make the ride down more fun for those of us with cash and shorts.

It's like being on the first hill of the roller coaster and hearing the clink clink clink of the chain as your pulled at an annoyingly slow pace toward the top. I just hope that the hill isn't so tall that it kills us all when we finally get to go down.

Market Seer said...

Great visual picture.

I definitely have cash and definitely have shorts...lol