- Caterpillar (CAT +4.9%) surges 5% after crushing Q3 earnings estimates and raising its full-year forecast for sales and earnings, expecting revenue in its construction business to jump ~20% and mining business to surge 30%.
- "Results were better than expected across the board, with construction, mining, energy all strong," says Edward Jones analyst Matt Arnold. The growth in energy and transport "has a nice impact on earnings given the fact that this business carries higher margins."
- "China continues to be a bright spot and a surprise to the upside," CFO Brad Halverson said in today's earnings conference call. "Our current estimate for 2017 is for the 10-ton-and-above excavator industry in China to more than double vs. last year, which would result in sales that are higher than our estimate of normal replacement demand for the region."
- A couple of analysts weigh in with higher stock price targets: Melius Research ups its 2018 EPS estimate to $7.50 from $7.10 and bumps its stock price target to $172 from $168, saying "there may be further outperformance as revenues cycle up to mid, with overshoot likely," and CFRA hikes its price target to $180 from $140, seeing the company as "well positioned for an improving global economy, with significant operating leverage on accelerating top-line growth."
- But others wonder if CAT can sustain such high growth rates; Steve Volkmann at Jefferies says “sustainability of the scorching pace of growth Caterpillar set in the latest quarter is in question because construction spending in the country has not yet hit an inflection point."
- Now read: Caterpillar Inc. 2017 Q3 - Results - Earnings Call Slides
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